Correlation Between Grand Canyon and United Airlines
Can any of the company-specific risk be diversified away by investing in both Grand Canyon 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 Grand Canyon and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and United Airlines Holdings, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and United Airlines.
Diversification Opportunities for Grand Canyon and United Airlines
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grand and United is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education 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 Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and United Airlines go up and down completely randomly.
Pair Corralation between Grand Canyon and United Airlines
Assuming the 90 days trading horizon Grand Canyon is expected to generate 2.22 times less return on investment than United Airlines. But when comparing it to its historical volatility, Grand Canyon Education is 1.26 times less risky than United Airlines. It trades about 0.17 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 5,743 in United Airlines Holdings on October 14, 2024 and sell it today you would earn a total of 4,259 from holding United Airlines Holdings or generate 74.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. United Airlines Holdings
Performance |
| Timeline |
| Grand Canyon Education |
| United Airlines Holdings |
Grand Canyon and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and United Airlines
The main advantage of trading using opposite Grand Canyon and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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.| Grand Canyon vs. ANTA SPORTS PRODUCT | Grand Canyon vs. The Yokohama Rubber | Grand Canyon vs. VULCAN MATERIALS | Grand Canyon vs. Gaming and Leisure |
| United Airlines vs. G8 EDUCATION | United Airlines vs. CAREER EDUCATION | United Airlines vs. GEELY AUTOMOBILE | United Airlines vs. Grand Canyon Education |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |