Correlation Between American International and Fibra Plus

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

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

Diversification Opportunities for American International and Fibra Plus

0.06

Correlation Coefficient

American International  Fibra Plus

Significant diversification

The 3 months correlation between American and Fibra is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and Fibra Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Plus and American International 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 International Group are associated (or correlated) with Fibra Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Plus has no effect on the direction of American International i.e., American International and Fibra Plus go up and down completely randomly.

Pair Corralation between American International and Fibra Plus

Assuming the 90 days trading horizon American International Group is expected to under-perform the Fibra Plus. But the stock apears to be less risky and, when comparing its historical volatility, American International Group is 8.1 times less risky than Fibra Plus. The stock trades about -0.18 of its potential returns per unit of risk. The Fibra Plus is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  529.00  in Fibra Plus on October 10, 2024 and sell it today you would earn a total of  141.00  from holding Fibra Plus or generate 26.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

American International Group  vs.  Fibra Plus

American International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American International Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, American International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fibra Plus

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra Plus are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fibra Plus may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with American International and Fibra Plus

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

The idea behind American International Group and Fibra Plus 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.