Correlation Between XTRA Bitcoin and United Airlines
Can any of the company-specific risk be diversified away by investing in both XTRA Bitcoin 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 XTRA Bitcoin and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XTRA Bitcoin and United Airlines Holdings, you can compare the effects of market volatilities on XTRA Bitcoin 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 XTRA Bitcoin with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of XTRA Bitcoin and United Airlines.
Diversification Opportunities for XTRA Bitcoin and United Airlines
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XTRA and United is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding XTRA Bitcoin 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 XTRA Bitcoin 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 XTRA Bitcoin 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 XTRA Bitcoin i.e., XTRA Bitcoin and United Airlines go up and down completely randomly.
Pair Corralation between XTRA Bitcoin and United Airlines
Given the investment horizon of 90 days XTRA Bitcoin is expected to generate 4.03 times more return on investment than United Airlines. However, XTRA Bitcoin is 4.03 times more volatile than United Airlines Holdings. It trades about 0.04 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.08 per unit of risk. If you would invest 0.19 in XTRA Bitcoin on August 30, 2024 and sell it today you would lose (0.05) from holding XTRA Bitcoin or give up 26.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XTRA Bitcoin vs. United Airlines Holdings
Performance |
| Timeline |
| XTRA Bitcoin |
| United Airlines Holdings |
XTRA Bitcoin and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XTRA Bitcoin and United Airlines
The main advantage of trading using opposite XTRA Bitcoin and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XTRA Bitcoin 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.| XTRA Bitcoin vs. Apple Inc | XTRA Bitcoin vs. Microsoft | XTRA Bitcoin vs. Alphabet Inc Class C | XTRA Bitcoin vs. Meta Platforms |
| United Airlines vs. JetBlue Airways Corp | United Airlines vs. SkyWest | United Airlines vs. International Consolidated Airlines |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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