Correlation Between United Airlines and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both United Airlines and Aeorema Communications 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 Aeorema Communications 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 Aeorema Communications Plc, you can compare the effects of market volatilities on United Airlines and Aeorema Communications 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 Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Aeorema Communications.
Diversification Opportunities for United Airlines and Aeorema Communications
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Aeorema is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications 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 Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of United Airlines i.e., United Airlines and Aeorema Communications go up and down completely randomly.
Pair Corralation between United Airlines and Aeorema Communications
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.08 times more return on investment than Aeorema Communications. However, United Airlines is 1.08 times more volatile than Aeorema Communications Plc. It trades about 0.19 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about -0.42 per unit of risk. If you would invest 10,116 in United Airlines Holdings on October 25, 2024 and sell it today you would earn a total of 834.00 from holding United Airlines Holdings or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Aeorema Communications Plc
Performance |
| Timeline |
| United Airlines Holdings |
| Aeorema Communications |
United Airlines and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Aeorema Communications
The main advantage of trading using opposite United Airlines and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| United Airlines vs. Grieg Seafood | United Airlines vs. AfriTin Mining | United Airlines vs. Fevertree Drinks Plc | United Airlines vs. First Majestic Silver |
| Aeorema Communications vs. Everyman Media Group | Aeorema Communications vs. G5 Entertainment AB | Aeorema Communications vs. Ecofin Global Utilities | Aeorema Communications vs. United Airlines Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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