Correlation Between American Airlines and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both American Airlines and NTG Nordic 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 American Airlines and NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and NTG Nordic Transport, you can compare the effects of market volatilities on American Airlines and NTG Nordic 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 American Airlines with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and NTG Nordic.
Diversification Opportunities for American Airlines and NTG Nordic
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and NTG is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and American Airlines 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 American Airlines Group are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of American Airlines i.e., American Airlines and NTG Nordic go up and down completely randomly.
Pair Corralation between American Airlines and NTG Nordic
Assuming the 90 days horizon American Airlines Group is expected to generate 2.25 times more return on investment than NTG Nordic. However, American Airlines is 2.25 times more volatile than NTG Nordic Transport. It trades about 0.2 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.24 per unit of risk. If you would invest 1,204 in American Airlines Group on October 24, 2024 and sell it today you would earn a total of 571.00 from holding American Airlines Group or generate 47.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
American Airlines Group vs. NTG Nordic Transport
Performance |
Timeline |
American Airlines |
NTG Nordic Transport |
American Airlines and NTG Nordic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Airlines and NTG Nordic
The main advantage of trading using opposite American Airlines and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.American Airlines vs. BJs Wholesale Club | American Airlines vs. HK Electric Investments | American Airlines vs. SPARTAN STORES | American Airlines vs. Guangdong Investment Limited |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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