Correlation Between IShares Technology and American Airlines
Can any of the company-specific risk be diversified away by investing in both IShares Technology 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 IShares Technology and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Technology ETF and American Airlines Group, you can compare the effects of market volatilities on IShares Technology 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 IShares Technology with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Technology and American Airlines.
Diversification Opportunities for IShares Technology and American Airlines
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and American is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and IShares Technology 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 iShares Technology ETF 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 IShares Technology i.e., IShares Technology and American Airlines go up and down completely randomly.
Pair Corralation between IShares Technology and American Airlines
Considering the 90-day investment horizon iShares Technology ETF is expected to generate 0.59 times more return on investment than American Airlines. However, iShares Technology ETF is 1.68 times less risky than American Airlines. It trades about 0.05 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.0 per unit of risk. If you would invest 8,829 in iShares Technology ETF on January 26, 2024 and sell it today you would earn a total of 4,055 from holding iShares Technology ETF or generate 45.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
iShares Technology ETF vs. American Airlines Group
Performance |
| Timeline |
| iShares Technology ETF |
| American Airlines |
IShares Technology and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Technology and American Airlines
The main advantage of trading using opposite IShares Technology and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Technology 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.| IShares Technology vs. OShares Quality Dividend | IShares Technology vs. Aquagold International | IShares Technology vs. Morningstar Unconstrained Allocation | IShares Technology vs. High Yield Municipal Fund |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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