Correlation Between American Airlines and Analog Devices,

Can any of the company-specific risk be diversified away by investing in both American Airlines and Analog Devices, 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 Analog Devices, 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 Analog Devices,, you can compare the effects of market volatilities on American Airlines and Analog Devices, 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 Analog Devices,. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Analog Devices,.

Diversification Opportunities for American Airlines and Analog Devices,

0.43

Correlation Coefficient

American Airlines  Analog Devices,

Very weak diversification

The 3 months correlation between American and Analog is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Analog Devices, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices, 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 Analog Devices,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices, has no effect on the direction of American Airlines i.e., American Airlines and Analog Devices, go up and down completely randomly.

Pair Corralation between American Airlines and Analog Devices,

Assuming the 90 days trading horizon American Airlines Group is expected to under-perform the Analog Devices,. In addition to that, American Airlines is 1.33 times more volatile than Analog Devices,. It trades about -0.29 of its total potential returns per unit of risk. Analog Devices, is currently generating about -0.05 per unit of volatility. If you would invest  64,259  in Analog Devices, on December 25, 2024 and sell it today you would lose (4,659) from holding Analog Devices, or give up 7.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

American Airlines Group  vs.  Analog Devices,

American Airlines

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Analog Devices,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Analog Devices, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with American Airlines and Analog Devices,

The main advantage of trading using opposite American Airlines and Analog Devices, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Analog Devices, 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 Analog Devices, will offset losses from the drop in Analog Devices,'s long position.

The idea behind American Airlines Group and Analog Devices, 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 CEOs Directory module to screen CEOs from public companies around the world.