Correlation Between United Airlines and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both United Airlines and Synchrony Financial 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 Synchrony Financial 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 Synchrony Financial, you can compare the effects of market volatilities on United Airlines and Synchrony Financial 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 Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Synchrony Financial.
Diversification Opportunities for United Airlines and Synchrony Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Synchrony is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial 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 Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of United Airlines i.e., United Airlines and Synchrony Financial go up and down completely randomly.
Pair Corralation between United Airlines and Synchrony Financial
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.24 times more return on investment than Synchrony Financial. However, United Airlines is 1.24 times more volatile than Synchrony Financial. It trades about 0.14 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.12 per unit of risk. If you would invest 4,145 in United Airlines Holdings on September 24, 2024 and sell it today you would earn a total of 5,528 from holding United Airlines Holdings or generate 133.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.84% |
| Values | Daily Returns |
United Airlines Holdings vs. Synchrony Financial
Performance |
| Timeline |
| United Airlines Holdings |
| Synchrony Financial |
United Airlines and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Synchrony Financial
The main advantage of trading using opposite United Airlines and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Synchrony Financial 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 Synchrony Financial will offset losses from the drop in Synchrony Financial'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 |
| Synchrony Financial vs. Zegona Communications Plc | Synchrony Financial vs. United Airlines Holdings | Synchrony Financial vs. mobilezone holding AG | Synchrony Financial vs. STMicroelectronics NV |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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