Correlation Between Amgen and United Airlines
Can any of the company-specific risk be diversified away by investing in both Amgen 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 Amgen and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and United Airlines Holdings, you can compare the effects of market volatilities on Amgen 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 Amgen with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and United Airlines.
Diversification Opportunities for Amgen and United Airlines
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amgen and United is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc 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 Amgen 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 Amgen Inc 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 Amgen i.e., Amgen and United Airlines go up and down completely randomly.
Pair Corralation between Amgen and United Airlines
Assuming the 90 days trading horizon Amgen Inc is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 1.6 times less risky than United Airlines. The stock trades about -0.09 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 87,038 in United Airlines Holdings on September 2, 2024 and sell it today you would earn a total of 109,762 from holding United Airlines Holdings or generate 126.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Amgen Inc vs. United Airlines Holdings
Performance |
| Timeline |
| Amgen Inc |
| United Airlines Holdings |
Amgen and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and United Airlines
The main advantage of trading using opposite Amgen and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen 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.| Amgen vs. Micron Technology | Amgen vs. GMxico Transportes SAB | Amgen vs. Delta Air Lines | Amgen vs. CVS Health |
| United Airlines vs. Grupo Hotelero Santa | United Airlines vs. UnitedHealth Group Incorporated | United Airlines vs. Micron Technology | United Airlines vs. Delta Air Lines |
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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