Correlation Between United Airlines and JD Sports
Can any of the company-specific risk be diversified away by investing in both United Airlines and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on United Airlines and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and JD Sports.
Diversification Opportunities for United Airlines and JD Sports
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and JD Sports is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of United Airlines i.e., United Airlines and JD Sports go up and down completely randomly.
Pair Corralation between United Airlines and JD Sports
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.74 times more return on investment than JD Sports. However, United Airlines Holdings is 1.35 times less risky than JD Sports. It trades about 0.43 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.44 per unit of risk. If you would invest 7,338 in United Airlines Holdings on August 25, 2024 and sell it today you would earn a total of 1,922 from holding United Airlines Holdings or generate 26.19% 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. JD Sports Fashion
Performance |
| Timeline |
| United Airlines Holdings |
| JD Sports Fashion |
United Airlines and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and JD Sports
The main advantage of trading using opposite United Airlines and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| United Airlines vs. Quadrise Plc | United Airlines vs. Intuitive Investments Group | United Airlines vs. European Metals Holdings | United Airlines vs. Athelney Trust plc |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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