Correlation Between Target and American Airlines
Can any of the company-specific risk be diversified away by investing in both Target 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 Target and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and American Airlines Group, you can compare the effects of market volatilities on Target 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 Target with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and American Airlines.
Diversification Opportunities for Target and American Airlines
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Target and American is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Target and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Target 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 Target 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 Target i.e., Target and American Airlines go up and down completely randomly.
Pair Corralation between Target and American Airlines
Considering the 90-day investment horizon Target is expected to generate 1.04 times less return on investment than American Airlines. But when comparing it to its historical volatility, Target is 1.15 times less risky than American Airlines. It trades about 0.03 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,274 in American Airlines Group on January 21, 2024 and sell it today you would earn a total of 137.00 from holding American Airlines Group or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. American Airlines Group
Performance |
| Timeline |
| Target |
| American Airlines |
Target and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and American Airlines
The main advantage of trading using opposite Target and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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.| Target vs. Aquagold International | Target vs. Morningstar Unconstrained Allocation | Target vs. Thrivent High Yield | Target vs. Via Renewables |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |