Correlation Between European Metals and United Airlines
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and United Airlines Holdings, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and United Airlines.
Diversification Opportunities for European Metals and United Airlines
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and United is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 European Metals 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 European Metals 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 European Metals i.e., European Metals and United Airlines go up and down completely randomly.
Pair Corralation between European Metals and United Airlines
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the United Airlines. In addition to that, European Metals is 1.45 times more volatile than United Airlines Holdings. It trades about -0.07 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.07 per unit of volatility. If you would invest 4,467 in United Airlines Holdings on August 25, 2024 and sell it today you would earn a total of 4,793 from holding United Airlines Holdings or generate 107.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.01% |
| Values | Daily Returns |
European Metals Holdings vs. United Airlines Holdings
Performance |
| Timeline |
| European Metals Holdings |
| United Airlines Holdings |
European Metals and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and United Airlines
The main advantage of trading using opposite European Metals and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Martin Marietta Materials | European Metals vs. Caledonia Mining | European Metals vs. Blackstone Loan Financing | European Metals vs. Greenroc Mining PLC |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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