Correlation Between Media and United Airlines
Can any of the company-specific risk be diversified away by investing in both Media 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 Media and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and United Airlines Holdings, you can compare the effects of market volatilities on Media 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 Media with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and United Airlines.
Diversification Opportunities for Media and United Airlines
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Media and United is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games 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 Media 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 Media and Games 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 Media i.e., Media and United Airlines go up and down completely randomly.
Pair Corralation between Media and United Airlines
Assuming the 90 days trading horizon Media and Games is expected to generate 1.24 times more return on investment than United Airlines. However, Media is 1.24 times more volatile than United Airlines Holdings. It trades about 0.23 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.2 per unit of risk. If you would invest 156.00 in Media and Games on August 28, 2024 and sell it today you would earn a total of 253.00 from holding Media and Games or generate 162.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media and Games vs. United Airlines Holdings
Performance |
| Timeline |
| Media and Games |
| United Airlines Holdings |
Media and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and United Airlines
The main advantage of trading using opposite Media and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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.| Media vs. Superior Plus Corp | Media vs. NMI Holdings | Media vs. Origin Agritech | Media vs. SIVERS SEMICONDUCTORS AB |
| United Airlines vs. Fast Retailing Co | United Airlines vs. BURLINGTON STORES | United Airlines vs. COSTCO WHOLESALE CDR | United Airlines vs. PENN NATL GAMING |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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