Correlation Between United Airlines and SEB SA
Can any of the company-specific risk be diversified away by investing in both United Airlines and SEB SA 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 SEB SA 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 SEB SA, you can compare the effects of market volatilities on United Airlines and SEB SA 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 SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and SEB SA.
Diversification Opportunities for United Airlines and SEB SA
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and SEB is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of United Airlines i.e., United Airlines and SEB SA go up and down completely randomly.
Pair Corralation between United Airlines and SEB SA
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.4 times more return on investment than SEB SA. However, United Airlines is 1.4 times more volatile than SEB SA. It trades about 0.09 of its potential returns per unit of risk. SEB SA is currently generating about 0.03 per unit of risk. If you would invest 3,844 in United Airlines Holdings on September 14, 2024 and sell it today you would earn a total of 5,889 from holding United Airlines Holdings or generate 153.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
United Airlines Holdings vs. SEB SA
Performance |
| Timeline |
| United Airlines Holdings |
| SEB SA |
United Airlines and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and SEB SA
The main advantage of trading using opposite United Airlines and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| United Airlines vs. Gamma Communications PLC | United Airlines vs. Air Products Chemicals | United Airlines vs. Cairo Communication SpA | United Airlines vs. Dalata Hotel Group |
| SEB SA vs. Metals Exploration Plc | SEB SA vs. Central Asia Metals | SEB SA vs. AMG Advanced Metallurgical | SEB SA vs. United Airlines Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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