Correlation Between United Airlines and Innovative Industrial
Can any of the company-specific risk be diversified away by investing in both United Airlines and Innovative Industrial 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 Innovative Industrial 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 Innovative Industrial Properties, you can compare the effects of market volatilities on United Airlines and Innovative Industrial 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 Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Innovative Industrial.
Diversification Opportunities for United Airlines and Innovative Industrial
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Innovative is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial 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 Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of United Airlines i.e., United Airlines and Innovative Industrial go up and down completely randomly.
Pair Corralation between United Airlines and Innovative Industrial
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.25 times more return on investment than Innovative Industrial. However, United Airlines is 1.25 times more volatile than Innovative Industrial Properties. It trades about 0.19 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about 0.03 per unit of risk. If you would invest 5,269 in United Airlines Holdings on September 1, 2024 and sell it today you would earn a total of 4,371 from holding United Airlines Holdings or generate 82.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Innovative Industrial Properti
Performance |
| Timeline |
| United Airlines Holdings |
| Innovative Industrial |
United Airlines and Innovative Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Innovative Industrial
The main advantage of trading using opposite United Airlines and Innovative Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Innovative Industrial 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 Innovative Industrial will offset losses from the drop in Innovative Industrial's long position.| United Airlines vs. Uniper SE | United Airlines vs. Mulberry Group PLC | United Airlines vs. London Security Plc | United Airlines vs. Triad Group PLC |
| Innovative Industrial vs. Uniper SE | Innovative Industrial vs. Mulberry Group PLC | Innovative Industrial vs. London Security Plc | Innovative Industrial vs. Triad Group PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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