Correlation Between International Consolidated and United Airlines
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and United Airlines Holdings, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and United Airlines.
Diversification Opportunities for International Consolidated and United Airlines
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and United is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air 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 International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and United Airlines go up and down completely randomly.
Pair Corralation between International Consolidated and United Airlines
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 2.35 times more return on investment than United Airlines. However, International Consolidated is 2.35 times more volatile than United Airlines Holdings. It trades about 0.17 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.31 per unit of risk. If you would invest 264.00 in International Consolidated Airlines on August 31, 2024 and sell it today you would earn a total of 57.00 from holding International Consolidated Airlines or generate 21.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. United Airlines Holdings
Performance |
| Timeline |
| International Consolidated |
| United Airlines Holdings |
International Consolidated and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and United Airlines
The main advantage of trading using opposite International Consolidated and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Deutsche Lufthansa AG | International Consolidated vs. Air France KLM | International Consolidated vs. Singapore Airlines | International Consolidated vs. Sun Country Airlines |
| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |