Correlation Between Fidelity National and United Airlines
Can any of the company-specific risk be diversified away by investing in both Fidelity National 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 Fidelity National and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity National Information and United Airlines Holdings, you can compare the effects of market volatilities on Fidelity National 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 Fidelity National with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and United Airlines.
Diversification Opportunities for Fidelity National and United Airlines
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and United is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information 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 Fidelity National 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 Fidelity National Information 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 Fidelity National i.e., Fidelity National and United Airlines go up and down completely randomly.
Pair Corralation between Fidelity National and United Airlines
Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Fidelity National Information is 2.06 times less risky than United Airlines. The stock trades about -0.07 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 21,210 in United Airlines Holdings on September 22, 2024 and sell it today you would earn a total of 8,689 from holding United Airlines Holdings or generate 40.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. United Airlines Holdings
Performance |
| Timeline |
| Fidelity National |
| United Airlines Holdings |
Fidelity National and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and United Airlines
The main advantage of trading using opposite Fidelity National and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National 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.| Fidelity National vs. Accenture plc | Fidelity National vs. International Business Machines | Fidelity National vs. Infosys Limited | Fidelity National vs. Fiserv Inc |
| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines Co | United Airlines vs. American Airlines Group | United Airlines vs. Gol Linhas Areas |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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