Correlation Between United Airlines and GX AI
Can any of the company-specific risk be diversified away by investing in both United Airlines and GX AI 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 GX AI 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 GX AI TECH, you can compare the effects of market volatilities on United Airlines and GX AI 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 GX AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and GX AI.
Diversification Opportunities for United Airlines and GX AI
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and BAIQ39 is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and GX AI TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GX AI TECH 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 GX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GX AI TECH has no effect on the direction of United Airlines i.e., United Airlines and GX AI go up and down completely randomly.
Pair Corralation between United Airlines and GX AI
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.89 times more return on investment than GX AI. However, United Airlines is 1.89 times more volatile than GX AI TECH. It trades about 0.17 of its potential returns per unit of risk. GX AI TECH is currently generating about 0.16 per unit of risk. If you would invest 8,479 in United Airlines Holdings on September 21, 2024 and sell it today you would earn a total of 21,420 from holding United Airlines Holdings or generate 252.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 89.27% |
| Values | Daily Returns |
United Airlines Holdings vs. GX AI TECH
Performance |
| Timeline |
| United Airlines Holdings |
| GX AI TECH |
United Airlines and GX AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and GX AI
The main advantage of trading using opposite United Airlines and GX AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, GX AI 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 GX AI will offset losses from the drop in GX AI's long position.| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines Co | United Airlines vs. American Airlines Group | United Airlines vs. Gol Linhas Areas |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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