Correlation Between Polar Capital and United Airlines
Can any of the company-specific risk be diversified away by investing in both Polar Capital 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 Polar Capital and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polar Capital Technology and United Airlines Holdings, you can compare the effects of market volatilities on Polar Capital 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 Polar Capital with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and United Airlines.
Diversification Opportunities for Polar Capital and United Airlines
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Polar and United is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology 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 Polar Capital 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 Polar Capital Technology 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 Polar Capital i.e., Polar Capital and United Airlines go up and down completely randomly.
Pair Corralation between Polar Capital and United Airlines
Assuming the 90 days trading horizon Polar Capital is expected to generate 3.91 times less return on investment than United Airlines. But when comparing it to its historical volatility, Polar Capital Technology is 2.04 times less risky than United Airlines. It trades about 0.13 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 9,865 in United Airlines Holdings on October 12, 2024 and sell it today you would earn a total of 1,111 from holding United Airlines Holdings or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Polar Capital Technology vs. United Airlines Holdings
Performance |
| Timeline |
| Polar Capital Technology |
| United Airlines Holdings |
Polar Capital and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and United Airlines
The main advantage of trading using opposite Polar Capital and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital 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.| Polar Capital vs. United States Steel | Polar Capital vs. Tata Steel Limited | Polar Capital vs. Delta Air Lines | Polar Capital vs. Fair Oaks Income |
| United Airlines vs. Broadcom | United Airlines vs. EVS Broadcast Equipment | United Airlines vs. SMA Solar Technology | United Airlines vs. Polar Capital Technology |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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