Correlation Between United Airlines and Indutrade
Can any of the company-specific risk be diversified away by investing in both United Airlines and Indutrade 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 United Airlines and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Indutrade AB, you can compare the effects of market volatilities on United Airlines and Indutrade 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 United Airlines with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Indutrade.
Diversification Opportunities for United Airlines and Indutrade
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Indutrade is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and United 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 United Airlines Holdings are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of United Airlines i.e., United Airlines and Indutrade go up and down completely randomly.
Pair Corralation between United Airlines and Indutrade
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.28 times more return on investment than Indutrade. However, United Airlines is 1.28 times more volatile than Indutrade AB. It trades about 0.19 of its potential returns per unit of risk. Indutrade AB is currently generating about -0.01 per unit of risk. If you would invest 9,616 in United Airlines Holdings on October 11, 2024 and sell it today you would earn a total of 643.00 from holding United Airlines Holdings or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
United Airlines Holdings vs. Indutrade AB
Performance |
| Timeline |
| United Airlines Holdings |
| Indutrade AB |
United Airlines and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Indutrade
The main advantage of trading using opposite United Airlines and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| United Airlines vs. European Metals Holdings | United Airlines vs. Gaztransport et Technigaz | United Airlines vs. McEwen Mining | United Airlines vs. Cornish Metals |
| Indutrade vs. Air Products Chemicals | Indutrade vs. Wizz Air Holdings | Indutrade vs. United Airlines Holdings | Indutrade vs. Infrastrutture Wireless Italiane |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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