Correlation Between United Airlines and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both United Airlines and Alibaba Group 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 United Airlines and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Alibaba Group Holding, you can compare the effects of market volatilities on United Airlines and Alibaba Group 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 United Airlines with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Alibaba Group.
Diversification Opportunities for United Airlines and Alibaba Group
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Alibaba is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and United Airlines 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 United Airlines Holdings are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of United Airlines i.e., United Airlines and Alibaba Group go up and down completely randomly.
Pair Corralation between United Airlines and Alibaba Group
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.21 times more return on investment than Alibaba Group. However, United Airlines is 1.21 times more volatile than Alibaba Group Holding. It trades about 0.16 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.04 per unit of risk. If you would invest 8,880 in United Airlines Holdings on October 16, 2024 and sell it today you would earn a total of 22,540 from holding United Airlines Holdings or generate 253.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.35% |
| Values | Daily Returns |
United Airlines Holdings vs. Alibaba Group Holding
Performance |
| Timeline |
| United Airlines Holdings |
| Alibaba Group Holding |
United Airlines and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Alibaba Group
The main advantage of trading using opposite United Airlines and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| United Airlines vs. Globus Medical, | United Airlines vs. Guidewire Software, | United Airlines vs. Charter Communications | United Airlines vs. Verizon Communications |
| Alibaba Group vs. Take Two Interactive Software | Alibaba Group vs. Bio Techne | Alibaba Group vs. Omega Healthcare Investors, | Alibaba Group vs. Teladoc Health |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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