Correlation Between Aega ASA and American Airlines
Can any of the company-specific risk be diversified away by investing in both Aega ASA 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 Aega ASA and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aega ASA and American Airlines Group, you can compare the effects of market volatilities on Aega ASA 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 Aega ASA with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aega ASA and American Airlines.
Diversification Opportunities for Aega ASA and American Airlines
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aega and American is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aega ASA and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Aega ASA 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 Aega ASA 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 Aega ASA i.e., Aega ASA and American Airlines go up and down completely randomly.
Pair Corralation between Aega ASA and American Airlines
Assuming the 90 days trading horizon Aega ASA is expected to under-perform the American Airlines. In addition to that, Aega ASA is 1.35 times more volatile than American Airlines Group. It trades about -0.08 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 1,362 in American Airlines Group on January 21, 2024 and sell it today you would earn a total of 49.00 from holding American Airlines Group or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
Aega ASA vs. American Airlines Group
Performance |
| Timeline |
| Aega ASA |
| American Airlines |
Aega ASA and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aega ASA and American Airlines
The main advantage of trading using opposite Aega ASA and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aega ASA 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.| Aega ASA vs. PCI Biotech Holding | Aega ASA vs. Odfjell Technology | Aega ASA vs. Clean Seas Seafood | Aega ASA vs. REC Silicon ASA |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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