Correlation Between Everspin Technologies and American Airlines
Can any of the company-specific risk be diversified away by investing in both Everspin Technologies 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 Everspin Technologies and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everspin Technologies and American Airlines Group, you can compare the effects of market volatilities on Everspin Technologies 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 Everspin Technologies with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everspin Technologies and American Airlines.
Diversification Opportunities for Everspin Technologies and American Airlines
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Everspin and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Everspin Technologies and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Everspin Technologies 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 Everspin Technologies 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 Everspin Technologies i.e., Everspin Technologies and American Airlines go up and down completely randomly.
Pair Corralation between Everspin Technologies and American Airlines
Given the investment horizon of 90 days Everspin Technologies is expected to under-perform the American Airlines. In addition to that, Everspin Technologies is 1.34 times more volatile than American Airlines Group. It trades about -0.07 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.12 per unit of volatility. If you would invest 1,360 in American Airlines Group on August 29, 2024 and sell it today you would earn a total of 86.50 from holding American Airlines Group or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everspin Technologies vs. American Airlines Group
Performance |
| Timeline |
| Everspin Technologies |
| American Airlines |
Everspin Technologies and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everspin Technologies and American Airlines
The main advantage of trading using opposite Everspin Technologies and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everspin Technologies 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.| Everspin Technologies vs. ABIVAX Socit Anonyme | Everspin Technologies vs. Morningstar Unconstrained Allocation | Everspin Technologies vs. SPACE | Everspin Technologies vs. Knife River |
| American Airlines vs. JetBlue Airways Corp | American Airlines vs. SkyWest | American Airlines vs. International Consolidated Airlines | American Airlines vs. Spirit Airlines |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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