Correlation Between United Airlines and Axway Software
Can any of the company-specific risk be diversified away by investing in both United Airlines and Axway Software 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 Axway Software 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 Axway Software SA, you can compare the effects of market volatilities on United Airlines and Axway Software 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 Axway Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Axway Software.
Diversification Opportunities for United Airlines and Axway Software
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Axway is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Axway Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software 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 Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software SA has no effect on the direction of United Airlines i.e., United Airlines and Axway Software go up and down completely randomly.
Pair Corralation between United Airlines and Axway Software
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.59 times more return on investment than Axway Software. However, United Airlines is 1.59 times more volatile than Axway Software SA. It trades about 0.19 of its potential returns per unit of risk. Axway Software SA is currently generating about -0.02 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 | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
United Airlines Holdings vs. Axway Software SA
Performance |
| Timeline |
| United Airlines Holdings |
| Axway Software SA |
United Airlines and Axway Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Axway Software
The main advantage of trading using opposite United Airlines and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Axway Software 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 Axway Software will offset losses from the drop in Axway Software's 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 |
| Axway Software vs. URU Metals | Axway Software vs. Coeur Mining | Axway Software vs. Rheinmetall AG | Axway Software vs. Ondine Biomedical |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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