Correlation Between DAIRY FARM and United Airlines
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM 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 DAIRY FARM and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIRY FARM INTL and United Airlines Holdings, you can compare the effects of market volatilities on DAIRY FARM 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 DAIRY FARM with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and United Airlines.
Diversification Opportunities for DAIRY FARM and United Airlines
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DAIRY and United is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL 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 DAIRY FARM 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 DAIRY FARM INTL 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 DAIRY FARM i.e., DAIRY FARM and United Airlines go up and down completely randomly.
Pair Corralation between DAIRY FARM and United Airlines
Assuming the 90 days trading horizon DAIRY FARM is expected to generate 25.66 times less return on investment than United Airlines. But when comparing it to its historical volatility, DAIRY FARM INTL is 1.15 times less risky than United Airlines. It trades about 0.0 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,029 in United Airlines Holdings on August 24, 2024 and sell it today you would earn a total of 4,971 from holding United Airlines Holdings or generate 123.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. United Airlines Holdings
Performance |
| Timeline |
| DAIRY FARM INTL |
| United Airlines Holdings |
DAIRY FARM and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and United Airlines
The main advantage of trading using opposite DAIRY FARM and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM 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.| DAIRY FARM vs. Western Copper and | DAIRY FARM vs. Zijin Mining Group | DAIRY FARM vs. WillScot Mobile Mini | DAIRY FARM vs. ALERION CLEANPOWER |
| United Airlines vs. MACOM Technology Solutions | United Airlines vs. PKSHA TECHNOLOGY INC | United Airlines vs. Sunny Optical Technology | United Airlines vs. Microchip Technology Incorporated |
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 CEOs Directory module to screen CEOs from public companies around the world.
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