Correlation Between American Hotel and Air Canada
Can any of the company-specific risk be diversified away by investing in both American Hotel and Air Canada at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Hotel and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and Air Canada, you can compare the effects of market volatilities on American Hotel and Air Canada and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Hotel with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Air Canada.
Diversification Opportunities for American Hotel and Air Canada
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Air is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and American Hotel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Hotel Income are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of American Hotel i.e., American Hotel and Air Canada go up and down completely randomly.
Pair Corralation between American Hotel and Air Canada
Assuming the 90 days trading horizon American Hotel Income is expected to under-perform the Air Canada. In addition to that, American Hotel is 2.76 times more volatile than Air Canada. It trades about -0.07 of its total potential returns per unit of risk. Air Canada is currently generating about 0.03 per unit of volatility. If you would invest 2,232 in Air Canada on August 31, 2024 and sell it today you would earn a total of 264.00 from holding Air Canada or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.35% |
| Values | Daily Returns |
American Hotel Income vs. Air Canada
Performance |
| Timeline |
| American Hotel Income |
| Air Canada |
American Hotel and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Air Canada
The main advantage of trading using opposite American Hotel and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Air Canada can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Air Canada will offset losses from the drop in Air Canada's long position.| American Hotel vs. Sprott Physical Gold | American Hotel vs. Canso Select Opportunities | American Hotel vs. Green Panda Capital | American Hotel vs. Manulife Finl Srs |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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