Correlation Between QuantShares Enhanced and American Airlines
Can any of the company-specific risk be diversified away by investing in both QuantShares Enhanced 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 QuantShares Enhanced and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QuantShares Enhanced Core and American Airlines Group, you can compare the effects of market volatilities on QuantShares Enhanced 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 QuantShares Enhanced with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of QuantShares Enhanced and American Airlines.
Diversification Opportunities for QuantShares Enhanced and American Airlines
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QuantShares and American is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding QuantShares Enhanced Core and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and QuantShares Enhanced 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 QuantShares Enhanced Core 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 QuantShares Enhanced i.e., QuantShares Enhanced and American Airlines go up and down completely randomly.
Pair Corralation between QuantShares Enhanced and American Airlines
Assuming the 90 days trading horizon QuantShares Enhanced Core is expected to generate 0.23 times more return on investment than American Airlines. However, QuantShares Enhanced Core is 4.31 times less risky than American Airlines. It trades about 0.27 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.02 per unit of risk. If you would invest 2,400 in QuantShares Enhanced Core on December 29, 2023 and sell it today you would earn a total of 71.00 from holding QuantShares Enhanced Core or generate 2.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
QuantShares Enhanced Core vs. American Airlines Group
Performance |
Timeline |
QuantShares Enhanced Core |
American Airlines |
QuantShares Enhanced and American Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with QuantShares Enhanced and American Airlines
The main advantage of trading using opposite QuantShares Enhanced and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QuantShares Enhanced 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.QuantShares Enhanced vs. QuantShares Enhanced Core | QuantShares Enhanced vs. NBI High Yield | QuantShares Enhanced vs. NBI Unconstrained Fixed | QuantShares Enhanced vs. Mackenzie Developed Ex North |
American Airlines vs. Canadian Pacific Railway | American Airlines vs. Daseke Inc | American Airlines vs. Marten Transport | American Airlines vs. Werner Enterprises |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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