Correlation Between American Airlines and Brewbilt Brewing

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

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

Diversification Opportunities for American Airlines and Brewbilt Brewing

0.0

Correlation Coefficient

American Airlines  Brewbilt Brewing

Pay attention - limited upside

The 3 months correlation between American and Brewbilt is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Brewbilt Brewing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brewbilt Brewing and American Airlines 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 Airlines Group are associated (or correlated) with Brewbilt Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brewbilt Brewing has no effect on the direction of American Airlines i.e., American Airlines and Brewbilt Brewing go up and down completely randomly.

Pair Corralation between American Airlines and Brewbilt Brewing

If you would invest  1,060  in American Airlines Group on September 2, 2024 and sell it today you would earn a total of  392.00  from holding American Airlines Group or generate 36.98% return on investment over 90 days.

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

American Airlines Group  vs.  Brewbilt Brewing Co

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 weak basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Brewbilt Brewing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brewbilt Brewing Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Brewbilt Brewing is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with American Airlines and Brewbilt Brewing

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

The idea behind American Airlines Group and Brewbilt Brewing Co 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.