Correlation Between American Airlines and Apple
Can any of the company-specific risk be diversified away by investing in both American Airlines and Apple 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 American Airlines and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and Apple Inc, you can compare the effects of market volatilities on American Airlines and Apple 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 American Airlines with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Apple.
Diversification Opportunities for American Airlines and Apple
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Apple is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and American Airlines 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 American Airlines Group are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of American Airlines i.e., American Airlines and Apple go up and down completely randomly.
Pair Corralation between American Airlines and Apple
Considering the 90-day investment horizon American Airlines Group is expected to generate 1.58 times more return on investment than Apple. However, American Airlines is 1.58 times more volatile than Apple Inc. It trades about -0.04 of its potential returns per unit of risk. Apple Inc is currently generating about -0.21 per unit of risk. If you would invest 1,457 in American Airlines Group on January 20, 2024 and sell it today you would lose (46.00) from holding American Airlines Group or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Apple Inc
Performance |
| Timeline |
| American Airlines |
| Apple Inc |
American Airlines and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Apple
The main advantage of trading using opposite American Airlines and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |