Correlation Between Beyond Meat and American Airlines

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

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

Diversification Opportunities for Beyond Meat and American Airlines

-0.9

Correlation Coefficient

Beyond Meat  American Airlines

Pay attention - limited upside

The 3 months correlation between Beyond and American is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Beyond Meat 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 Beyond Meat 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 Beyond Meat i.e., Beyond Meat and American Airlines go up and down completely randomly.

Pair Corralation between Beyond Meat and American Airlines

Assuming the 90 days trading horizon Beyond Meat is expected to under-perform the American Airlines. In addition to that, Beyond Meat is 2.58 times more volatile than American Airlines Group. It trades about -0.08 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.05 per unit of volatility. If you would invest  10,450  in American Airlines Group on October 8, 2024 and sell it today you would earn a total of  127.00  from holding American Airlines Group or generate 1.22% return on investment over 90 days.

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

Beyond Meat  vs.  American Airlines Group

Beyond Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Meat 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

American Airlines

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, American Airlines sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beyond Meat and American Airlines

The main advantage of trading using opposite Beyond Meat and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Meat 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 Beyond Meat 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.