Don't buy AAL now, it is underperforming the market
14 Dec, 201813 min read
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AAL ranked worse than it's peers today. On a longer term basis, investors in AMERICAN AIRLINES GROUP INC. made -0.03% per day. Friday's performance of -0.15% was a underperformance compared to it's daily average.
AAL showed a strong bearish trend over the last 3 months. During this period AAL fell by -19.62% and saw a maximum drawdown of -30.41%. There were 4 short signals during this period that returned a cumulative of +7.43% to investors.
AAL has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 14 Jul, 2017 to 12 Oct, 2018. Over the last 2 years 11 months and 10 days, AAL underperformed the SP500 index on 49% days. Which indicates that on days AAL underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
AAL was profitable on 50% days in the last three months. During this time, it delivered on average -0.29% per day. It delivered it's worst daily return of -9.12%, during this period, on Friday, 7 Dec, 2018. The longest stort-term trend during this period was 7 losing days, which started on 4 Oct, 2018 and ended on 12 Oct, 2018. This bearish trend lost -22.21% of investor capital.
During the last year AAL had 6 profitable months and 6 loss making months. AAL returned profits in fewer months than SP500 index. AAL was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -19.3% compared to -7.28% returned by SP500 index in Oct 2018. AAL had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year.
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AAL is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in AAL's volatility from 17 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that AAL has significant positive skewness in it's return distribution. This indicates that investors can expect AAL to recover from drawdowns quickly. Which makes AAL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in AAL derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.
AAL has more chance of extreme outcomes than the SP500 index. Therefore, AAL must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than AAL.
Based on your interest in AAL you may find it interesting to know that AMZN is a large cap that has shown remarkable performance and deserves to be on every investors' watchlist.
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