Correlation Between United Airlines and Infrastrutture Wireless
Can any of the company-specific risk be diversified away by investing in both United Airlines and Infrastrutture Wireless 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 Infrastrutture Wireless 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 Infrastrutture Wireless Italiane, you can compare the effects of market volatilities on United Airlines and Infrastrutture Wireless 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 Infrastrutture Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Infrastrutture Wireless.
Diversification Opportunities for United Airlines and Infrastrutture Wireless
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Infrastrutture is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Infrastrutture Wireless Italia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastrutture Wireless 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 Infrastrutture Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastrutture Wireless has no effect on the direction of United Airlines i.e., United Airlines and Infrastrutture Wireless go up and down completely randomly.
Pair Corralation between United Airlines and Infrastrutture Wireless
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.64 times more return on investment than Infrastrutture Wireless. However, United Airlines is 2.64 times more volatile than Infrastrutture Wireless Italiane. It trades about 0.13 of its potential returns per unit of risk. Infrastrutture Wireless Italiane is currently generating about -0.05 per unit of risk. If you would invest 4,218 in United Airlines Holdings on September 20, 2024 and sell it today you would earn a total of 5,468 from holding United Airlines Holdings or generate 129.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.81% |
| Values | Daily Returns |
United Airlines Holdings vs. Infrastrutture Wireless Italia
Performance |
| Timeline |
| United Airlines Holdings |
| Infrastrutture Wireless |
United Airlines and Infrastrutture Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Infrastrutture Wireless
The main advantage of trading using opposite United Airlines and Infrastrutture Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Infrastrutture Wireless 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 Infrastrutture Wireless will offset losses from the drop in Infrastrutture Wireless' long position.| United Airlines vs. CleanTech Lithium plc | United Airlines vs. OneSavings Bank PLC | United Airlines vs. Home Depot | United Airlines vs. Blackstone Loan Financing |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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