Correlation Between United Airlines and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both United Airlines and Cairo Communication 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 Cairo Communication 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 Cairo Communication SpA, you can compare the effects of market volatilities on United Airlines and Cairo Communication 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 Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Cairo Communication.
Diversification Opportunities for United Airlines and Cairo Communication
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Cairo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA 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 Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of United Airlines i.e., United Airlines and Cairo Communication go up and down completely randomly.
Pair Corralation between United Airlines and Cairo Communication
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.39 times more return on investment than Cairo Communication. However, United Airlines is 1.39 times more volatile than Cairo Communication SpA. It trades about 0.09 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.08 per unit of risk. If you would invest 3,730 in United Airlines Holdings on September 12, 2024 and sell it today you would earn a total of 5,852 from holding United Airlines Holdings or generate 156.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Cairo Communication SpA
Performance |
| Timeline |
| United Airlines Holdings |
| Cairo Communication SpA |
United Airlines and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Cairo Communication
The main advantage of trading using opposite United Airlines and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.| United Airlines vs. Optima Health plc | United Airlines vs. Axway Software SA | United Airlines vs. American Homes 4 | United Airlines vs. Induction Healthcare Group |
| Cairo Communication vs. Jacquet Metal Service | Cairo Communication vs. Universal Music Group | Cairo Communication vs. Zegona Communications Plc | Cairo Communication vs. Sovereign Metals |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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