Correlation Between United Airlines and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both United Airlines and Prudential Financial 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 Prudential Financial 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 Prudential Financial, you can compare the effects of market volatilities on United Airlines and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Prudential Financial.
Diversification Opportunities for United Airlines and Prudential Financial
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Prudential is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of United Airlines i.e., United Airlines and Prudential Financial go up and down completely randomly.
Pair Corralation between United Airlines and Prudential Financial
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.67 times more return on investment than Prudential Financial. However, United Airlines is 1.67 times more volatile than Prudential Financial. It trades about 0.19 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.07 per unit of risk. If you would invest 24,860 in United Airlines Holdings on November 6, 2024 and sell it today you would earn a total of 6,227 from holding United Airlines Holdings or generate 25.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Prudential Financial
Performance |
| Timeline |
| United Airlines Holdings |
| Prudential Financial |
United Airlines and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Prudential Financial
The main advantage of trading using opposite United Airlines and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| United Airlines vs. Paycom Software | United Airlines vs. Clover Health Investments, | United Airlines vs. MAHLE Metal Leve | United Airlines vs. Guidewire Software, |
| Prudential Financial vs. Verizon Communications | Prudential Financial vs. MAHLE Metal Leve | Prudential Financial vs. METISA Metalrgica Timboense | Prudential Financial vs. Metalurgica Gerdau SA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |