Correlation Between United Airlines and Mineral Financial
Can any of the company-specific risk be diversified away by investing in both United Airlines and Mineral Financial 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 Mineral Financial 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 Mineral Financial Investments, you can compare the effects of market volatilities on United Airlines and Mineral Financial 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 Mineral Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Mineral Financial.
Diversification Opportunities for United Airlines and Mineral Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Mineral is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Mineral Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Financial 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 Mineral Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Financial has no effect on the direction of United Airlines i.e., United Airlines and Mineral Financial go up and down completely randomly.
Pair Corralation between United Airlines and Mineral Financial
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.9 times more return on investment than Mineral Financial. However, United Airlines Holdings is 1.12 times less risky than Mineral Financial. It trades about 0.25 of its potential returns per unit of risk. Mineral Financial Investments is currently generating about 0.21 per unit of risk. If you would invest 9,518 in United Airlines Holdings on November 4, 2024 and sell it today you would earn a total of 1,200 from holding United Airlines Holdings or generate 12.61% 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. Mineral Financial Investments
Performance |
| Timeline |
| United Airlines Holdings |
| Mineral Financial |
United Airlines and Mineral Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Mineral Financial
The main advantage of trading using opposite United Airlines and Mineral Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Mineral Financial 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 Mineral Financial will offset losses from the drop in Mineral Financial's long position.| United Airlines vs. AMG Advanced Metallurgical | United Airlines vs. Adriatic Metals | United Airlines vs. McEwen Mining | United Airlines vs. Lundin Mining Corp |
| Mineral Financial vs. Leroy Seafood Group | Mineral Financial vs. Scottish American Investment | Mineral Financial vs. Symphony Environmental Technologies | Mineral Financial vs. Herald Investment Trust |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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