Correlation Between Applied Materials and United Airlines
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and United Airlines Holdings, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and United Airlines.
Diversification Opportunities for Applied Materials and United Airlines
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and United is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials 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 Applied Materials 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 Applied Materials 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 Applied Materials i.e., Applied Materials and United Airlines go up and down completely randomly.
Pair Corralation between Applied Materials and United Airlines
Assuming the 90 days trading horizon Applied Materials is expected to generate 39.37 times less return on investment than United Airlines. In addition to that, Applied Materials is 1.16 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 0.41 per unit of volatility. If you would invest 158,500 in United Airlines Holdings on September 1, 2024 and sell it today you would earn a total of 38,300 from holding United Airlines Holdings or generate 24.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. United Airlines Holdings
Performance |
| Timeline |
| Applied Materials |
| United Airlines Holdings |
Applied Materials and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and United Airlines
The main advantage of trading using opposite Applied Materials and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.| Applied Materials vs. FIBRA Storage | Applied Materials vs. Monster Beverage Corp | Applied Materials vs. GMxico Transportes SAB | Applied Materials vs. Costco Wholesale |
| United Airlines vs. The Select Sector | United Airlines vs. Promotora y Operadora | United Airlines vs. SPDR Series Trust | United Airlines vs. iShares 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |