Correlation Between Barclays Capital and American Airlines
Can any of the company-specific risk be diversified away by investing in both Barclays Capital 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 Barclays Capital and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays Capital and American Airlines Group, you can compare the effects of market volatilities on Barclays Capital 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 Barclays Capital with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and American Airlines.
Diversification Opportunities for Barclays Capital and American Airlines
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barclays and American is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Barclays Capital 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 Barclays Capital 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 Barclays Capital i.e., Barclays Capital and American Airlines go up and down completely randomly.
Pair Corralation between Barclays Capital and American Airlines
Considering the 90-day investment horizon Barclays Capital is expected to under-perform the American Airlines. But the etf apears to be less risky and, when comparing its historical volatility, Barclays Capital is 3.66 times less risky than American Airlines. The etf trades about -0.08 of its potential returns per unit of risk. The American Airlines Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,389 in American Airlines Group on January 26, 2024 and sell it today you would earn a total of 3.00 from holding American Airlines Group or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 23.39% |
| Values | Daily Returns |
Barclays Capital vs. American Airlines Group
Performance |
| Timeline |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Airlines |
Barclays Capital and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays Capital and American Airlines
The main advantage of trading using opposite Barclays Capital and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays Capital 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 Barclays Capital 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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