Correlation Between Goldman Sachs and American Airlines
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs 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 Goldman Sachs and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Large and American Airlines Group, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and American Airlines.
Diversification Opportunities for Goldman Sachs and American Airlines
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Goldman and American is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Large and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Goldman Sachs 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 Goldman Sachs Large 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 Goldman Sachs i.e., Goldman Sachs and American Airlines go up and down completely randomly.
Pair Corralation between Goldman Sachs and American Airlines
Assuming the 90 days horizon Goldman Sachs Large is expected to under-perform the American Airlines. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs Large is 2.94 times less risky than American Airlines. The mutual fund trades about -0.15 of its potential returns per unit of risk. The American Airlines Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,393 in American Airlines Group on January 19, 2024 and sell it today you would earn a total of 9.00 from holding American Airlines Group or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Large vs. American Airlines Group
Performance |
| Timeline |
| Goldman Sachs Large |
| American Airlines |
Goldman Sachs and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and American Airlines
The main advantage of trading using opposite Goldman Sachs and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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 Goldman Sachs Large 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |