Correlation Between United Airlines and Gaztransport
Can any of the company-specific risk be diversified away by investing in both United Airlines and Gaztransport 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 Gaztransport 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 Gaztransport et Technigaz, you can compare the effects of market volatilities on United Airlines and Gaztransport 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 Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Gaztransport.
Diversification Opportunities for United Airlines and Gaztransport
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Gaztransport is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz 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 Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of United Airlines i.e., United Airlines and Gaztransport go up and down completely randomly.
Pair Corralation between United Airlines and Gaztransport
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.99 times more return on investment than Gaztransport. However, United Airlines is 1.99 times more volatile than Gaztransport et Technigaz. It trades about 0.19 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.35 per unit of risk. If you would invest 9,901 in United Airlines Holdings on November 7, 2024 and sell it today you would earn a total of 858.00 from holding United Airlines Holdings or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Gaztransport et Technigaz
Performance |
| Timeline |
| United Airlines Holdings |
| Gaztransport et Technigaz |
United Airlines and Gaztransport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Gaztransport
The main advantage of trading using opposite United Airlines and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Gaztransport 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 Gaztransport will offset losses from the drop in Gaztransport's long position.| United Airlines vs. Verizon Communications | United Airlines vs. Aeorema Communications Plc | United Airlines vs. Wizz Air Holdings | United Airlines vs. CAP LEASE AVIATION |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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