This module allows you to analyze existing cross correlation between Alcoa Inc and American Airlines Group Inc. You can compare the effects of market volatilities on Alcoa 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 Alcoa with a short position of American Airlines. See also your portfolio center. Please also check ongoing floating volatility patterns of Alcoa and American Airlines.
Allowing for the 30-days total investment horizon, Alcoa Inc is expected to under-perform the American Airlines. In addition to that, Alcoa is 1.01 times more volatile than American Airlines Group Inc. It trades about -0.11 of its total potential returns per unit of risk. American Airlines Group Inc is currently generating about -0.07 per unit of volatility. If you would invest 4,791 in American Airlines Group Inc on January 25, 2017 and sell it today you would lose (163.00) from holding American Airlines Group Inc or give up 3.4% of portfolio value over 30 days.
Pair Corralation between Alcoa and American Airlines
Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Inc. and American Airlines Group Inc. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on American Airlines Group and Alcoa 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 Alcoa Inc 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 Group has no effect on the direction of Alcoa i.e. Alcoa and American Airlines go up and down completely randomly.