Correlation Between HEALTHCARE REAL and American Airlines
Can any of the company-specific risk be diversified away by investing in both HEALTHCARE REAL and American Airlines 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 HEALTHCARE REAL and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEALTHCARE REAL A and American Airlines Group, you can compare the effects of market volatilities on HEALTHCARE REAL and American Airlines 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 HEALTHCARE REAL with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE REAL and American Airlines.
Diversification Opportunities for HEALTHCARE REAL and American Airlines
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HEALTHCARE and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE REAL A and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and HEALTHCARE REAL 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 HEALTHCARE REAL A are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of HEALTHCARE REAL i.e., HEALTHCARE REAL and American Airlines go up and down completely randomly.
Pair Corralation between HEALTHCARE REAL and American Airlines
Assuming the 90 days horizon HEALTHCARE REAL A is expected to generate 0.68 times more return on investment than American Airlines. However, HEALTHCARE REAL A is 1.47 times less risky than American Airlines. It trades about 0.02 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.01 per unit of risk. If you would invest 1,591 in HEALTHCARE REAL A on September 2, 2024 and sell it today you would earn a total of 109.00 from holding HEALTHCARE REAL A or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEALTHCARE REAL A vs. American Airlines Group
Performance |
| Timeline |
| HEALTHCARE REAL A |
| American Airlines |
HEALTHCARE REAL and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEALTHCARE REAL and American Airlines
The main advantage of trading using opposite HEALTHCARE REAL and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHCARE REAL position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc |
| American Airlines vs. Southwest Airlines Co | American Airlines vs. Superior Plus Corp | American Airlines vs. NMI Holdings | American Airlines vs. Origin Agritech |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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