Correlation Between Hospital Mater and American Airlines

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

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

Diversification Opportunities for Hospital Mater and American Airlines

-0.17

Correlation Coefficient

Hospital Mater  American Airlines

Good diversification

The 3 months correlation between Hospital and American is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hospital Mater Dei and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Hospital Mater 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 Hospital Mater Dei 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 Hospital Mater i.e., Hospital Mater and American Airlines go up and down completely randomly.

Pair Corralation between Hospital Mater and American Airlines

Assuming the 90 days trading horizon Hospital Mater Dei is expected to generate 1.33 times more return on investment than American Airlines. However, Hospital Mater is 1.33 times more volatile than American Airlines Group. It trades about 0.03 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.29 per unit of risk. If you would invest  367.00  in Hospital Mater Dei on December 26, 2024 and sell it today you would earn a total of  11.00  from holding Hospital Mater Dei or generate 3.0% return on investment over 90 days.

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

Hospital Mater Dei  vs.  American Airlines Group

Hospital Mater Dei

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hospital Mater Dei are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Hospital Mater may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 uncertain 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.

Pair Trading with Hospital Mater and American Airlines

The main advantage of trading using opposite Hospital Mater and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hospital Mater 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 Hospital Mater Dei 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.