Correlation Between Global Crossing and United Airlines
Can any of the company-specific risk be diversified away by investing in both Global Crossing 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 Global Crossing and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Crossing Airlines and United Airlines Holdings, you can compare the effects of market volatilities on Global Crossing 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 Global Crossing with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Crossing and United Airlines.
Diversification Opportunities for Global Crossing and United Airlines
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and United is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Global Crossing Airlines 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 Global Crossing 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 Global Crossing Airlines 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 Global Crossing i.e., Global Crossing and United Airlines go up and down completely randomly.
Pair Corralation between Global Crossing and United Airlines
Assuming the 90 days horizon Global Crossing Airlines is expected to generate 1.79 times more return on investment than United Airlines. However, Global Crossing is 1.79 times more volatile than United Airlines Holdings. It trades about 0.22 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.28 per unit of risk. If you would invest 43.00 in Global Crossing Airlines on October 21, 2024 and sell it today you would earn a total of 6.00 from holding Global Crossing Airlines or generate 13.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Crossing Airlines vs. United Airlines Holdings
Performance |
| Timeline |
| Global Crossing Airlines |
| United Airlines Holdings |
Global Crossing and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Crossing and United Airlines
The main advantage of trading using opposite Global Crossing and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Crossing 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.| Global Crossing vs. Finnair Oyj | Global Crossing vs. easyJet plc | Global Crossing vs. Norse Atlantic ASA | Global Crossing vs. Air New Zealand |
| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Delta Air Lines |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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