Correlation Between United Airlines and Infosys
Can any of the company-specific risk be diversified away by investing in both United Airlines and Infosys 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 Infosys 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 Infosys Limited, you can compare the effects of market volatilities on United Airlines and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Infosys.
Diversification Opportunities for United Airlines and Infosys
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Infosys is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of United Airlines i.e., United Airlines and Infosys go up and down completely randomly.
Pair Corralation between United Airlines and Infosys
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.04 times more return on investment than Infosys. However, United Airlines is 1.04 times more volatile than Infosys Limited. It trades about 0.1 of its potential returns per unit of risk. Infosys Limited is currently generating about 0.05 per unit of risk. If you would invest 10,130 in United Airlines Holdings on September 12, 2024 and sell it today you would earn a total of 19,070 from holding United Airlines Holdings or generate 188.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.23% |
| Values | Daily Returns |
United Airlines Holdings vs. Infosys Limited
Performance |
| Timeline |
| United Airlines Holdings |
| Infosys Limited |
United Airlines and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Infosys
The main advantage of trading using opposite United Airlines and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines Co | United Airlines vs. American Airlines Group |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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