Correlation Between Oritani Financial and American Airlines

Can any of the company-specific risk be diversified away by investing in both Oritani Financial 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 Oritani Financial and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oritani Financial Corp and American Airlines Group, you can compare the effects of market volatilities on Oritani Financial 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 Oritani Financial with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oritani Financial and American Airlines.

Diversification Opportunities for Oritani Financial and American Airlines

0.0

Correlation Coefficient

Oritani Financial  American Airlines

Pay attention - limited upside

The 3 months correlation between Oritani and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oritani Financial Corp and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Oritani Financial 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 Oritani Financial Corp 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 Oritani Financial i.e., Oritani Financial and American Airlines go up and down completely randomly.

Pair Corralation between Oritani Financial and American Airlines

If you would invest  1,390  in American Airlines Group on February 6, 2024 and sell it today you would earn a total of  7.50  from holding American Airlines Group or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Oritani Financial Corp  vs.  American Airlines Group

Oritani Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oritani Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Oritani Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

American Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Airlines Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, American Airlines is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Oritani Financial and American Airlines

The main advantage of trading using opposite Oritani Financial and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oritani Financial 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 Oritani Financial Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.