Correlation Between CARSALES and American Airlines
Can any of the company-specific risk be diversified away by investing in both CARSALES 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 CARSALES and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and American Airlines Group, you can compare the effects of market volatilities on CARSALES 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 CARSALES with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and American Airlines.
Diversification Opportunities for CARSALES and American Airlines
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CARSALES and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and CARSALES 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 CARSALESCOM 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 CARSALES i.e., CARSALES and American Airlines go up and down completely randomly.
Pair Corralation between CARSALES and American Airlines
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.65 times more return on investment than American Airlines. However, CARSALESCOM is 1.54 times less risky than American Airlines. It trades about 0.09 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.02 per unit of risk. If you would invest 1,292 in CARSALESCOM on September 3, 2024 and sell it today you would earn a total of 1,268 from holding CARSALESCOM or generate 98.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. American Airlines Group
Performance |
| Timeline |
| CARSALESCOM |
| American Airlines |
CARSALES and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and American Airlines
The main advantage of trading using opposite CARSALES and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES 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.| CARSALES vs. COMBA TELECOM SYST | CARSALES vs. SENECA FOODS A | CARSALES vs. Entravision Communications | CARSALES vs. JJ SNACK FOODS |
| American Airlines vs. Delta Air Lines | American Airlines vs. AIR CHINA LTD | American Airlines vs. RYANAIR HLDGS ADR | American Airlines vs. Southwest Airlines Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |