Correlation Between Charles Colvard and American Airlines

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Can any of the company-specific risk be diversified away by investing in both Charles Colvard 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 Charles Colvard and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charles Colvard and American Airlines Group, you can compare the effects of market volatilities on Charles Colvard 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 Charles Colvard with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Colvard and American Airlines.

Diversification Opportunities for Charles Colvard and American Airlines

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Charles and American is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Charles Colvard and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Charles Colvard 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 Charles Colvard 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 Charles Colvard i.e., Charles Colvard and American Airlines go up and down completely randomly.

Pair Corralation between Charles Colvard and American Airlines

Given the investment horizon of 90 days Charles Colvard is expected to under-perform the American Airlines. In addition to that, Charles Colvard is 2.68 times more volatile than American Airlines Group. It trades about -0.04 of its total potential returns per unit of risk. American Airlines Group is currently generating about -0.02 per unit of volatility. If you would invest  1,554  in American Airlines Group on December 29, 2023 and sell it today you would lose (19.00) from holding American Airlines Group or give up 1.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Charles Colvard  vs.  American Airlines Group

 Performance 
       Timeline  
Charles Colvard 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Charles Colvard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
American Airlines 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Charles Colvard and American Airlines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Charles Colvard and American Airlines

The main advantage of trading using opposite Charles Colvard and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles Colvard 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 Charles Colvard 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.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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