Correlation Between Cairo Communication and United Airlines
Can any of the company-specific risk be diversified away by investing in both Cairo Communication 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 Cairo Communication and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Communication SpA and United Airlines Holdings, you can compare the effects of market volatilities on Cairo Communication 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 Cairo Communication with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and United Airlines.
Diversification Opportunities for Cairo Communication and United Airlines
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairo and United is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA 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 Cairo Communication 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 Cairo Communication SpA 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 Cairo Communication i.e., Cairo Communication and United Airlines go up and down completely randomly.
Pair Corralation between Cairo Communication and United Airlines
Assuming the 90 days trading horizon Cairo Communication is expected to generate 2.24 times less return on investment than United Airlines. But when comparing it to its historical volatility, Cairo Communication SpA is 1.43 times less risky than United Airlines. It trades about 0.09 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,081 in United Airlines Holdings on September 4, 2024 and sell it today you would earn a total of 5,544 from holding United Airlines Holdings or generate 135.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.81% |
| Values | Daily Returns |
Cairo Communication SpA vs. United Airlines Holdings
Performance |
| Timeline |
| Cairo Communication SpA |
| United Airlines Holdings |
Cairo Communication and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and United Airlines
The main advantage of trading using opposite Cairo Communication and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication 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.| Cairo Communication vs. Ecofin Global Utilities | Cairo Communication vs. Target Healthcare REIT | Cairo Communication vs. Cardinal Health | Cairo Communication vs. Charter Communications Cl |
| United Airlines vs. Cairo Communication SpA | United Airlines vs. Silvercorp Metals | United Airlines vs. Axway Software SA | United Airlines vs. Endeavour Mining Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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