Correlation Between United Airlines and Young Cos
Can any of the company-specific risk be diversified away by investing in both United Airlines and Young Cos 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 Young Cos 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 Young Cos Brewery, you can compare the effects of market volatilities on United Airlines and Young Cos 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 Young Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Young Cos.
Diversification Opportunities for United Airlines and Young Cos
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Young is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Young Cos Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Cos Brewery 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 Young Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Cos Brewery has no effect on the direction of United Airlines i.e., United Airlines and Young Cos go up and down completely randomly.
Pair Corralation between United Airlines and Young Cos
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.56 times more return on investment than Young Cos. However, United Airlines is 1.56 times more volatile than Young Cos Brewery. It trades about 0.49 of its potential returns per unit of risk. Young Cos Brewery is currently generating about 0.13 per unit of risk. If you would invest 7,650 in United Airlines Holdings on August 28, 2024 and sell it today you would earn a total of 2,171 from holding United Airlines Holdings or generate 28.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Young Cos Brewery
Performance |
| Timeline |
| United Airlines Holdings |
| Young Cos Brewery |
United Airlines and Young Cos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Young Cos
The main advantage of trading using opposite United Airlines and Young Cos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Young Cos 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 Young Cos will offset losses from the drop in Young Cos' long position.| United Airlines vs. Public Storage | United Airlines vs. Ion Beam Applications | United Airlines vs. Ally Financial | United Airlines vs. Bank of Ireland |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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