Correlation Between United Airlines and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both United Airlines and Ebro Foods 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 Ebro Foods 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 Ebro Foods, you can compare the effects of market volatilities on United Airlines and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Ebro Foods.
Diversification Opportunities for United Airlines and Ebro Foods
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Ebro is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of United Airlines i.e., United Airlines and Ebro Foods go up and down completely randomly.
Pair Corralation between United Airlines and Ebro Foods
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 4.63 times more return on investment than Ebro Foods. However, United Airlines is 4.63 times more volatile than Ebro Foods. It trades about 0.19 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.12 per unit of risk. If you would invest 9,901 in United Airlines Holdings on November 5, 2024 and sell it today you would earn a total of 817.00 from holding United Airlines Holdings or generate 8.25% 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. Ebro Foods
Performance |
| Timeline |
| United Airlines Holdings |
| Ebro Foods |
United Airlines and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Ebro Foods
The main advantage of trading using opposite United Airlines and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| United Airlines vs. Norwegian Air Shuttle | United Airlines vs. Polar Capital Technology | United Airlines vs. Allianz Technology Trust | United Airlines vs. Spotify Technology SA |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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