Correlation Between Trade Desk and United Airlines
Can any of the company-specific risk be diversified away by investing in both Trade Desk 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 Trade Desk and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Trade Desk and United Airlines Holdings, you can compare the effects of market volatilities on Trade Desk 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 Trade Desk with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Desk and United Airlines.
Diversification Opportunities for Trade Desk and United Airlines
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Trade and United is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk 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 Trade Desk 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 The Trade Desk 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 Trade Desk i.e., Trade Desk and United Airlines go up and down completely randomly.
Pair Corralation between Trade Desk and United Airlines
Assuming the 90 days trading horizon Trade Desk is expected to generate 1.98 times less return on investment than United Airlines. In addition to that, Trade Desk is 1.37 times more volatile than United Airlines Holdings. It trades about 0.11 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.31 per unit of volatility. If you would invest 7,363 in United Airlines Holdings on September 1, 2024 and sell it today you would earn a total of 1,779 from holding United Airlines Holdings or generate 24.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Trade Desk vs. United Airlines Holdings
Performance |
| Timeline |
| Trade Desk |
| United Airlines Holdings |
Trade Desk and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Desk and United Airlines
The main advantage of trading using opposite Trade Desk and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk 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.| Trade Desk vs. NORWEGIAN AIR SHUT | Trade Desk vs. Harmony Gold Mining | Trade Desk vs. GALENA MINING LTD | Trade Desk vs. ONWARD MEDICAL BV |
| United Airlines vs. Motorcar Parts of | United Airlines vs. Cars Inc | United Airlines vs. CARSALESCOM | United Airlines vs. Carsales |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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