Correlation Between American Airlines and Gol Linhas
Can any of the company-specific risk be diversified away by investing in both American Airlines and Gol Linhas 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 American Airlines and Gol Linhas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and Gol Linhas Aereas, you can compare the effects of market volatilities on American Airlines and Gol Linhas 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 American Airlines with a short position of Gol Linhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Gol Linhas.
Diversification Opportunities for American Airlines and Gol Linhas
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Gol is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Gol Linhas Aereas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Aereas and American Airlines 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 American Airlines Group are associated (or correlated) with Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Aereas has no effect on the direction of American Airlines i.e., American Airlines and Gol Linhas go up and down completely randomly.
Pair Corralation between American Airlines and Gol Linhas
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.16 times more return on investment than Gol Linhas. However, American Airlines Group is 6.18 times less risky than Gol Linhas. It trades about 0.04 of its potential returns per unit of risk. Gol Linhas Aereas is currently generating about -0.5 per unit of risk. If you would invest 1,393 in American Airlines Group on January 24, 2024 and sell it today you would earn a total of 60.00 from holding American Airlines Group or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 14.52% |
| Values | Daily Returns |
American Airlines Group vs. Gol Linhas Aereas
Performance |
| Timeline |
| American Airlines |
| Gol Linhas Aereas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Airlines and Gol Linhas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Gol Linhas
The main advantage of trading using opposite American Airlines and Gol Linhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Gol Linhas 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 Gol Linhas will offset losses from the drop in Gol Linhas' long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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