Correlation Between Dow Jones and United
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By analyzing existing cross correlation between Dow Jones Industrial and United Airlines Holdings, you can compare the effects of market volatilities on Dow Jones and United 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 Dow Jones with a short position of United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and United.
Diversification Opportunities for Dow Jones and United
Very good diversification
The 3 months correlation between Dow and United is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial are associated (or correlated) with United. 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 Dow Jones i.e., Dow Jones and United go up and down completely randomly.
Pair Corralation between Dow Jones and United
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.0 times more return on investment than United. However, Dow Jones is 2.0 times more volatile than United Airlines Holdings. It trades about 0.16 of its potential returns per unit of risk. United Airlines Holdings is currently generating about -0.05 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
Dow Jones Industrial vs. United Airlines Holdings
Performance |
| Timeline |
Dow Jones and United Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
United Airlines Holdings
Pair trading matchups for United
Pair Trading with Dow Jones and United
The main advantage of trading using opposite Dow Jones and United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, United 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 will offset losses from the drop in United's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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