Correlation Between United Airlines and Companhia
Can any of the company-specific risk be diversified away by investing in both United Airlines and Companhia 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 Companhia 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 Companhia de Fiacao, you can compare the effects of market volatilities on United Airlines and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Companhia.
Diversification Opportunities for United Airlines and Companhia
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Companhia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Companhia de Fiacao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Fiacao 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Fiacao has no effect on the direction of United Airlines i.e., United Airlines and Companhia go up and down completely randomly.
Pair Corralation between United Airlines and Companhia
Assuming the 90 days trading horizon United Airlines is expected to generate 1.06 times less return on investment than Companhia. But when comparing it to its historical volatility, United Airlines Holdings is 2.12 times less risky than Companhia. It trades about 0.33 of its potential returns per unit of risk. Companhia de Fiacao is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Companhia de Fiacao on September 13, 2024 and sell it today you would earn a total of 299.00 from holding Companhia de Fiacao or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
United Airlines Holdings vs. Companhia de Fiacao
Performance |
| Timeline |
| United Airlines Holdings |
| Companhia de Fiacao |
United Airlines and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Companhia
The main advantage of trading using opposite United Airlines and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| United Airlines vs. Metalurgica Gerdau SA | United Airlines vs. Verizon Communications | United Airlines vs. MAHLE Metal Leve | United Airlines vs. HDFC Bank Limited |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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