Correlation Between GMxico Transportes and United Airlines
Can any of the company-specific risk be diversified away by investing in both GMxico Transportes 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 GMxico Transportes and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMxico Transportes SAB and United Airlines Holdings, you can compare the effects of market volatilities on GMxico Transportes 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 GMxico Transportes with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMxico Transportes and United Airlines.
Diversification Opportunities for GMxico Transportes and United Airlines
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GMxico and United is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB 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 GMxico Transportes 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 GMxico Transportes SAB 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 GMxico Transportes i.e., GMxico Transportes and United Airlines go up and down completely randomly.
Pair Corralation between GMxico Transportes and United Airlines
Assuming the 90 days trading horizon GMxico Transportes SAB is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, GMxico Transportes SAB is 1.67 times less risky than United Airlines. The stock trades about -0.01 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 90,600 in United Airlines Holdings on November 2, 2024 and sell it today you would earn a total of 132,080 from holding United Airlines Holdings or generate 145.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMxico Transportes SAB vs. United Airlines Holdings
Performance |
| Timeline |
| GMxico Transportes SAB |
| United Airlines Holdings |
GMxico Transportes and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMxico Transportes and United Airlines
The main advantage of trading using opposite GMxico Transportes and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMxico Transportes 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.| GMxico Transportes vs. Taiwan Semiconductor Manufacturing | GMxico Transportes vs. Genworth Financial | GMxico Transportes vs. Capital One Financial | GMxico Transportes vs. CVS Health |
| United Airlines vs. Verizon Communications | United Airlines vs. Genworth Financial | United Airlines vs. The Bank of | United Airlines vs. Deutsche Bank Aktiengesellschaft |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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