Correlation Between First Solar and United Airlines
Can any of the company-specific risk be diversified away by investing in both First Solar 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 First Solar and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and United Airlines Holdings, you can compare the effects of market volatilities on First Solar 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 First Solar with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and United Airlines.
Diversification Opportunities for First Solar and United Airlines
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and United is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Solar 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 First Solar 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 First Solar 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 First Solar i.e., First Solar and United Airlines go up and down completely randomly.
Pair Corralation between First Solar and United Airlines
Assuming the 90 days trading horizon First Solar is expected to under-perform the United Airlines. In addition to that, First Solar is 1.22 times more volatile than United Airlines Holdings. It trades about -0.01 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.09 per unit of volatility. If you would invest 74,501 in United Airlines Holdings on December 4, 2024 and sell it today you would earn a total of 116,499 from holding United Airlines Holdings or generate 156.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
First Solar vs. United Airlines Holdings
Performance |
| Timeline |
| First Solar |
| United Airlines Holdings |
First Solar and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and United Airlines
The main advantage of trading using opposite First Solar and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar 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.| First Solar vs. Grupo Carso SAB | First Solar vs. Deutsche Bank Aktiengesellschaft | First Solar vs. Micron Technology | First Solar vs. Capital One Financial |
| United Airlines vs. KB Home | United Airlines vs. Monster Beverage Corp | United Airlines vs. The Bank of | United Airlines vs. Grupo Carso SAB |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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