Correlation Between Sydbank and United Airlines
Can any of the company-specific risk be diversified away by investing in both Sydbank and United Airlines 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 Sydbank and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sydbank and United Airlines Holdings, you can compare the effects of market volatilities on Sydbank and United Airlines 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 Sydbank with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank and United Airlines.
Diversification Opportunities for Sydbank and United Airlines
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sydbank and United is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings and Sydbank 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 Sydbank are associated (or correlated) with United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Sydbank i.e., Sydbank and United Airlines go up and down completely randomly.
Pair Corralation between Sydbank and United Airlines
Assuming the 90 days trading horizon Sydbank is expected to under-perform the United Airlines. In addition to that, Sydbank is 1.53 times more volatile than United Airlines Holdings. It trades about -0.01 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.2 per unit of volatility. If you would invest 9,616 in United Airlines Holdings on October 11, 2024 and sell it today you would earn a total of 643.00 from holding United Airlines Holdings or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sydbank vs. United Airlines Holdings
Performance |
| Timeline |
| Sydbank |
| United Airlines Holdings |
Sydbank and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sydbank and United Airlines
The main advantage of trading using opposite Sydbank and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sydbank position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Sydbank vs. Bankers Investment Trust | Sydbank vs. SMA Solar Technology | Sydbank vs. Seraphim Space Investment | Sydbank vs. Primorus Investments 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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