Correlation Between Scholastic and United Airlines
Can any of the company-specific risk be diversified away by investing in both Scholastic 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 Scholastic and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholastic and United Airlines Holdings, you can compare the effects of market volatilities on Scholastic 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 Scholastic with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and United Airlines.
Diversification Opportunities for Scholastic and United Airlines
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scholastic and United is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic 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 Scholastic 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 Scholastic 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 Scholastic i.e., Scholastic and United Airlines go up and down completely randomly.
Pair Corralation between Scholastic and United Airlines
Given the investment horizon of 90 days Scholastic is expected to generate 1.86 times less return on investment than United Airlines. In addition to that, Scholastic is 1.06 times more volatile than United Airlines Holdings. It trades about 0.24 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.47 per unit of volatility. If you would invest 7,725 in United Airlines Holdings on September 3, 2024 and sell it today you would earn a total of 1,958 from holding United Airlines Holdings or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scholastic vs. United Airlines Holdings
Performance |
| Timeline |
| Scholastic |
| United Airlines Holdings |
Scholastic and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scholastic and United Airlines
The main advantage of trading using opposite Scholastic and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic 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.| Scholastic vs. New York Times | Scholastic vs. Gannett Co | Scholastic vs. Lee Enterprises Incorporated | Scholastic vs. Pearson PLC ADR |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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