Correlation Between Mars Acquisition and American Airlines
Can any of the company-specific risk be diversified away by investing in both Mars Acquisition 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 Mars Acquisition and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mars Acquisition Corp and American Airlines Group, you can compare the effects of market volatilities on Mars Acquisition 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 Mars Acquisition with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mars Acquisition and American Airlines.
Diversification Opportunities for Mars Acquisition and American Airlines
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mars and American is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mars Acquisition Corp and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Mars Acquisition 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 Mars Acquisition Corp 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 Mars Acquisition i.e., Mars Acquisition and American Airlines go up and down completely randomly.
Pair Corralation between Mars Acquisition and American Airlines
Assuming the 90 days horizon Mars Acquisition Corp is expected to generate 4.0 times more return on investment than American Airlines. However, Mars Acquisition is 4.0 times more volatile than American Airlines Group. It trades about 0.18 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.22 per unit of risk. If you would invest 25.00 in Mars Acquisition Corp on September 26, 2024 and sell it today you would earn a total of 13.00 from holding Mars Acquisition Corp or generate 52.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 44.44% |
Values | Daily Returns |
Mars Acquisition Corp vs. American Airlines Group
Performance |
Timeline |
Mars Acquisition Corp |
American Airlines |
Mars Acquisition and American Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mars Acquisition and American Airlines
The main advantage of trading using opposite Mars Acquisition and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mars Acquisition 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.Mars Acquisition vs. Visa Class A | ||
Mars Acquisition vs. Diamond Hill Investment | ||
Mars Acquisition vs. Distoken Acquisition | ||
Mars Acquisition vs. AllianceBernstein Holding LP |
American Airlines vs. Delta Air Lines | ||
American Airlines vs. Southwest Airlines | ||
American Airlines vs. JetBlue Airways Corp | ||
American Airlines vs. United Airlines Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |