Correlation Between Cedar Realty and American Airlines

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

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

Diversification Opportunities for Cedar Realty and American Airlines

0.62

Correlation Coefficient

Cedar Realty  American Airlines

Poor diversification

The 3 months correlation between Cedar and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Cedar Realty 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 Cedar Realty Trust 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 Cedar Realty i.e., Cedar Realty and American Airlines go up and down completely randomly.

Pair Corralation between Cedar Realty and American Airlines

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 0.96 times more return on investment than American Airlines. However, Cedar Realty Trust is 1.04 times less risky than American Airlines. It trades about 0.06 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.04 per unit of risk. If you would invest  1,193  in Cedar Realty Trust on September 17, 2024 and sell it today you would earn a total of  477.00  from holding Cedar Realty Trust or generate 39.98% return on investment over 90 days.

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

Cedar Realty Trust  vs.  American Airlines Group

Cedar Realty Trust

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Cedar Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Cedar Realty and American Airlines

The main advantage of trading using opposite Cedar Realty and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty 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 Cedar Realty Trust 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.