Correlation Between London Security and United Airlines
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and United Airlines Holdings, you can compare the effects of market volatilities on London Security 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 London Security with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and United Airlines.
Diversification Opportunities for London Security and United Airlines
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and United is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc 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 London Security 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 London Security Plc 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 London Security i.e., London Security and United Airlines go up and down completely randomly.
Pair Corralation between London Security and United Airlines
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the United Airlines. In addition to that, London Security is 1.01 times more volatile than United Airlines Holdings. It trades about -0.22 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.5 per unit of volatility. If you would invest 7,864 in United Airlines Holdings on September 3, 2024 and sell it today you would earn a total of 1,904 from holding United Airlines Holdings or generate 24.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. United Airlines Holdings
Performance |
| Timeline |
| London Security Plc |
| United Airlines Holdings |
London Security and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and United Airlines
The main advantage of trading using opposite London Security and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Griffin Mining | London Security vs. Lundin Mining Corp | London Security vs. Veolia Environnement VE | London Security vs. Caledonia Mining |
| United Airlines vs. Catalyst Media Group | United Airlines vs. CATLIN GROUP | United Airlines vs. RTW Venture Fund | United Airlines vs. Secure Property Development |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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