Correlation Between International Business and American Airlines
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and American Airlines Group, you can compare the effects of market volatilities on International Business 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 International Business with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and American Airlines.
Diversification Opportunities for International Business and American Airlines
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and American is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and International Business 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 International Business Machines 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 International Business i.e., International Business and American Airlines go up and down completely randomly.
Pair Corralation between International Business and American Airlines
Considering the 90-day investment horizon International Business Machines is expected to under-perform the American Airlines. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 3.05 times less risky than American Airlines. The stock trades about -0.31 of its potential returns per unit of risk. The American Airlines Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,393 in American Airlines Group on January 19, 2024 and sell it today you would earn a total of 9.00 from holding American Airlines Group or generate 0.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
International Business Machine vs. American Airlines Group
Performance |
Timeline |
International Business |
American Airlines |
International Business and American Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Business and American Airlines
The main advantage of trading using opposite International Business and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.International Business vs. Pfizer Inc | International Business vs. Home Federal Bancorp | International Business vs. Betterware De Mexico | International Business vs. Heartland Financial USA |
American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Transaction History View history of all your transactions and understand their impact on performance | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |