Correlation Between American Airlines and Virgin Group

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American Airlines and Virgin Group 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 Virgin Group 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 Virgin Group Acquisition, you can compare the effects of market volatilities on American Airlines and Virgin Group 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 Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Virgin Group.

Diversification Opportunities for American Airlines and Virgin Group

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between American and Virgin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition 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 Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of American Airlines i.e., American Airlines and Virgin Group go up and down completely randomly.

Pair Corralation between American Airlines and Virgin Group

Considering the 90-day investment horizon American Airlines is expected to generate 21.96 times less return on investment than Virgin Group. But when comparing it to its historical volatility, American Airlines Group is 2.58 times less risky than Virgin Group. It trades about 0.03 of its potential returns per unit of risk. Virgin Group Acquisition is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  148.00  in Virgin Group Acquisition on October 11, 2024 and sell it today you would earn a total of  28.00  from holding Virgin Group Acquisition or generate 18.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

American Airlines Group  vs.  Virgin Group Acquisition

 Performance 
       Timeline  
American Airlines 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.
Virgin Group Acquisition 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Group Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Virgin Group showed solid returns over the last few months and may actually be approaching a breakup point.

American Airlines and Virgin Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Airlines and Virgin Group

The main advantage of trading using opposite American Airlines and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Virgin Group 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 Virgin Group will offset losses from the drop in Virgin Group's long position.
The idea behind American Airlines Group and Virgin Group Acquisition 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.
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

Other Complementary Tools

Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
CEOs Directory
Screen CEOs from public companies around the world
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum