Correlation Between Volkswagen and United Airlines
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and United Airlines Holdings, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and United Airlines.
Diversification Opportunities for Volkswagen and United Airlines
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and United is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 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 Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and United Airlines go up and down completely randomly.
Pair Corralation between Volkswagen and United Airlines
Assuming the 90 days trading horizon Volkswagen is expected to generate 1.04 times less return on investment than United Airlines. But when comparing it to its historical volatility, Volkswagen AG is 1.12 times less risky than United Airlines. It trades about 0.17 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 9,639 in United Airlines Holdings on October 10, 2024 and sell it today you would earn a total of 498.00 from holding United Airlines Holdings or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Volkswagen AG vs. United Airlines Holdings
Performance |
| Timeline |
| Volkswagen AG |
| United Airlines Holdings |
Volkswagen and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and United Airlines
The main advantage of trading using opposite Volkswagen and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. Diversified Energy | Volkswagen vs. Monster Beverage Corp | Volkswagen vs. Jupiter Green Investment | Volkswagen vs. Tyson Foods Cl |
| United Airlines vs. Dairy Farm International | United Airlines vs. Gamma Communications PLC | United Airlines vs. Zoom Video Communications | United Airlines vs. MoneysupermarketCom Group PLC |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |