Correlation Between Intel and American Airlines
Can any of the company-specific risk be diversified away by investing in both Intel 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 Intel and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and American Airlines Group, you can compare the effects of market volatilities on Intel 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 Intel with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and American Airlines.
Diversification Opportunities for Intel and American Airlines
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Intel and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Intel and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Intel 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 Intel 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 Intel i.e., Intel and American Airlines go up and down completely randomly.
Pair Corralation between Intel and American Airlines
Assuming the 90 days trading horizon Intel is expected to generate 3.31 times less return on investment than American Airlines. In addition to that, Intel is 1.12 times more volatile than American Airlines Group. It trades about 0.01 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.02 per unit of volatility. If you would invest 1,239 in American Airlines Group on September 5, 2024 and sell it today you would earn a total of 119.00 from holding American Airlines Group or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. American Airlines Group
Performance |
| Timeline |
| Intel |
| American Airlines |
Intel and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and American Airlines
The main advantage of trading using opposite Intel and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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.| Intel vs. American Airlines Group | Intel vs. Aegean Airlines SA | Intel vs. CITY OFFICE REIT | Intel vs. GungHo Online Entertainment |
| American Airlines vs. Hemisphere Energy Corp | American Airlines vs. United Internet AG | American Airlines vs. Computer And Technologies | American Airlines vs. Charter Communications |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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