Correlation Between Las Vegas and United Airlines
Can any of the company-specific risk be diversified away by investing in both Las Vegas 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 Las Vegas and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Las Vegas Sands and United Airlines Holdings, you can compare the effects of market volatilities on Las Vegas 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 Las Vegas with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and United Airlines.
Diversification Opportunities for Las Vegas and United Airlines
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Las and United is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands 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 Las Vegas 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 Las Vegas Sands 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 Las Vegas i.e., Las Vegas and United Airlines go up and down completely randomly.
Pair Corralation between Las Vegas and United Airlines
Assuming the 90 days trading horizon Las Vegas Sands is expected to generate 0.63 times more return on investment than United Airlines. However, Las Vegas Sands is 1.59 times less risky than United Airlines. It trades about 0.33 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.13 per unit of risk. If you would invest 101,574 in Las Vegas Sands on September 14, 2024 and sell it today you would earn a total of 11,759 from holding Las Vegas Sands or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Las Vegas Sands vs. United Airlines Holdings
Performance |
| Timeline |
| Las Vegas Sands |
| United Airlines Holdings |
Las Vegas and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and United Airlines
The main advantage of trading using opposite Las Vegas and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas 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.| Las Vegas vs. Verizon Communications | Las Vegas vs. Grupo Carso SAB | Las Vegas vs. McEwen Mining | Las Vegas vs. DXC Technology |
| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines | United Airlines vs. Controladora Vuela Compaa |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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