Correlation Between Marine Products and American Airlines
Can any of the company-specific risk be diversified away by investing in both Marine Products 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 Marine Products and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marine Products and American Airlines Group, you can compare the effects of market volatilities on Marine Products 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 Marine Products with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and American Airlines.
Diversification Opportunities for Marine Products and American Airlines
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Marine and American is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Marine Products 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 Marine Products 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 Marine Products i.e., Marine Products and American Airlines go up and down completely randomly.
Pair Corralation between Marine Products and American Airlines
Considering the 90-day investment horizon Marine Products is expected to generate 0.89 times more return on investment than American Airlines. However, Marine Products is 1.13 times less risky than American Airlines. It trades about 0.08 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.03 per unit of risk. If you would invest 1,075 in Marine Products on January 24, 2024 and sell it today you would earn a total of 38.00 from holding Marine Products or generate 3.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Marine Products vs. American Airlines Group
Performance |
Timeline |
Marine Products |
American Airlines |
Marine Products and American Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marine Products and American Airlines
The main advantage of trading using opposite Marine Products and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products 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.Marine Products vs. Cedar Fair LP | Marine Products vs. Six Flags Entertainment | Marine Products vs. Leatt Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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