Correlation Between United Airlines and Paramount Global
Can any of the company-specific risk be diversified away by investing in both United Airlines and Paramount Global 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 Paramount Global 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 Paramount Global, you can compare the effects of market volatilities on United Airlines and Paramount Global 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 Paramount Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Paramount Global.
Diversification Opportunities for United Airlines and Paramount Global
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Paramount is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Paramount Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global 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 Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global has no effect on the direction of United Airlines i.e., United Airlines and Paramount Global go up and down completely randomly.
Pair Corralation between United Airlines and Paramount Global
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.73 times more return on investment than Paramount Global. However, United Airlines Holdings is 1.37 times less risky than Paramount Global. It trades about 0.35 of its potential returns per unit of risk. Paramount Global is currently generating about 0.05 per unit of risk. If you would invest 25,454 in United Airlines Holdings on September 13, 2024 and sell it today you would earn a total of 4,010 from holding United Airlines Holdings or generate 15.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Paramount Global
Performance |
| Timeline |
| United Airlines Holdings |
| Paramount Global |
United Airlines and Paramount Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Paramount Global
The main advantage of trading using opposite United Airlines and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Paramount Global 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 Paramount Global will offset losses from the drop in Paramount Global's long position.| United Airlines vs. Align Technology | United Airlines vs. The Home Depot | United Airlines vs. Brpr Corporate Offices | United Airlines vs. Paycom Software |
| Paramount Global vs. Tyson Foods | Paramount Global vs. Zoom Video Communications | Paramount Global vs. Lloyds Banking Group | Paramount Global vs. Verizon Communications |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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