Correlation Between Lindblad Expeditions and American Airlines

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

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

Diversification Opportunities for Lindblad Expeditions and American Airlines

0.36

Correlation Coefficient

Lindblad Expeditions  American Airlines

Weak diversification

The 3 months correlation between Lindblad and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Lindblad Expeditions i.e., Lindblad Expeditions and American Airlines go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and American Airlines

Given the investment horizon of 90 days Lindblad Expeditions is expected to generate 25.76 times less return on investment than American Airlines. In addition to that, Lindblad Expeditions is 1.34 times more volatile than American Airlines Group. It trades about 0.01 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.21 per unit of volatility. If you would invest  1,725  in American Airlines Group on October 24, 2024 and sell it today you would earn a total of  137.00  from holding American Airlines Group or generate 7.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Lindblad Expeditions Holdings  vs.  American Airlines Group

Lindblad Expeditions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

American Airlines

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lindblad Expeditions and American Airlines

The main advantage of trading using opposite Lindblad Expeditions and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindblad Expeditions 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 Lindblad Expeditions Holdings 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.