Correlation Between STMICROELECTRONICS and United Airlines
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS 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 STMICROELECTRONICS and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and United Airlines Holdings, you can compare the effects of market volatilities on STMICROELECTRONICS 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 STMICROELECTRONICS with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and United Airlines.
Diversification Opportunities for STMICROELECTRONICS and United Airlines
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMICROELECTRONICS and United is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS i.e., STMICROELECTRONICS and United Airlines go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and United Airlines
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 1.18 times less risky than United Airlines. The stock trades about -0.04 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,704 in United Airlines Holdings on October 25, 2024 and sell it today you would earn a total of 6,046 from holding United Airlines Holdings or generate 128.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. United Airlines Holdings
Performance |
| Timeline |
| STMICROELECTRONICS |
| United Airlines Holdings |
STMICROELECTRONICS and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and United Airlines
The main advantage of trading using opposite STMICROELECTRONICS and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS 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.| STMICROELECTRONICS vs. AAC TECHNOLOGHLDGADR | STMICROELECTRONICS vs. Firan Technology Group | STMICROELECTRONICS vs. GAZTRTECHNIUADR15EO01 | STMICROELECTRONICS vs. Playtech plc |
| United Airlines vs. Delta Air Lines | United Airlines vs. Air China Limited | United Airlines vs. AIR CHINA LTD | United Airlines vs. RYANAIR HLDGS ADR |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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