Correlation Between NTG Nordic and American Airlines
Can any of the company-specific risk be diversified away by investing in both NTG Nordic 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 NTG Nordic and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and American Airlines Group, you can compare the effects of market volatilities on NTG Nordic 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 NTG Nordic with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and American Airlines.
Diversification Opportunities for NTG Nordic and American Airlines
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NTG and American is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and NTG Nordic 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 NTG Nordic Transport 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 NTG Nordic i.e., NTG Nordic and American Airlines go up and down completely randomly.
Pair Corralation between NTG Nordic and American Airlines
Assuming the 90 days trading horizon NTG Nordic is expected to generate 2.62 times less return on investment than American Airlines. In addition to that, NTG Nordic is 1.02 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 0.03 per unit of volatility. If you would invest 1,470 in American Airlines Group on October 16, 2024 and sell it today you would earn a total of 297.00 from holding American Airlines Group or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. American Airlines Group
Performance |
| Timeline |
| NTG Nordic Transport |
| American Airlines |
NTG Nordic and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and American Airlines
The main advantage of trading using opposite NTG Nordic and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic 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.| NTG Nordic vs. Acadia Healthcare | NTG Nordic vs. HEALTHSTREAM | NTG Nordic vs. MPH Health Care | NTG Nordic vs. Molina Healthcare |
| American Airlines vs. NTG Nordic Transport | American Airlines vs. Transport International Holdings | American Airlines vs. SOEDER SPORTFISKE AB | American Airlines vs. ANTA SPORTS PRODUCT |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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