Correlation Between Focus Home and American Airlines
Can any of the company-specific risk be diversified away by investing in both Focus Home 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 Focus Home and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Home Interactive and American Airlines Group, you can compare the effects of market volatilities on Focus Home 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 Focus Home with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and American Airlines.
Diversification Opportunities for Focus Home and American Airlines
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Focus and American is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Focus Home 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 Focus Home Interactive 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 Focus Home i.e., Focus Home and American Airlines go up and down completely randomly.
Pair Corralation between Focus Home and American Airlines
Assuming the 90 days trading horizon Focus Home Interactive is expected to under-perform the American Airlines. In addition to that, Focus Home is 1.3 times more volatile than American Airlines Group. It trades about -0.29 of its total potential returns per unit of risk. American Airlines Group is currently generating about -0.04 per unit of volatility. 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 | Weak |
| Accuracy | 36.36% |
| Values | Daily Returns |
Focus Home Interactive vs. American Airlines Group
Performance |
| Timeline |
| Focus Home Interactive |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Airlines |
Focus Home and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and American Airlines
The main advantage of trading using opposite Focus Home and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home 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.The idea behind Focus Home Interactive and American Airlines Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |