Correlation Between Consolidated Communications and United Airlines
Can any of the company-specific risk be diversified away by investing in both Consolidated Communications 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 Consolidated Communications and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Communications Holdings and United Airlines Holdings, you can compare the effects of market volatilities on Consolidated Communications 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 Consolidated Communications with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Communications and United Airlines.
Diversification Opportunities for Consolidated Communications and United Airlines
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Consolidated and United is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications Ho 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 Consolidated Communications 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 Consolidated Communications Holdings 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 Consolidated Communications i.e., Consolidated Communications and United Airlines go up and down completely randomly.
Pair Corralation between Consolidated Communications and United Airlines
Assuming the 90 days horizon Consolidated Communications is expected to generate 7.01 times less return on investment than United Airlines. But when comparing it to its historical volatility, Consolidated Communications Holdings is 3.11 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 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,813 in United Airlines Holdings on August 29, 2024 and sell it today you would earn a total of 4,704 from holding United Airlines Holdings or generate 97.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Communications Ho vs. United Airlines Holdings
Performance |
| Timeline |
| Consolidated Communications |
| United Airlines Holdings |
Consolidated Communications and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Communications and United Airlines
The main advantage of trading using opposite Consolidated Communications and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Communications 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.| Consolidated Communications vs. Verizon Communications | Consolidated Communications vs. ATT Inc | Consolidated Communications vs. ATT Inc | Consolidated Communications vs. Deutsche Telekom AG |
| United Airlines vs. Treasury Wine Estates | United Airlines vs. Hochschild Mining plc | United Airlines vs. LIFENET INSURANCE CO | United Airlines vs. PENN NATL GAMING |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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