Correlation Between United Airlines and Patria Investments
Can any of the company-specific risk be diversified away by investing in both United Airlines and Patria Investments 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 Patria Investments 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 Patria Investments Limited, you can compare the effects of market volatilities on United Airlines and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Patria Investments.
Diversification Opportunities for United Airlines and Patria Investments
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Patria is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of United Airlines i.e., United Airlines and Patria Investments go up and down completely randomly.
Pair Corralation between United Airlines and Patria Investments
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.01 times more return on investment than Patria Investments. However, United Airlines is 2.01 times more volatile than Patria Investments Limited. It trades about 0.04 of its potential returns per unit of risk. Patria Investments Limited is currently generating about -0.05 per unit of risk. If you would invest 30,710 in United Airlines Holdings on October 28, 2024 and sell it today you would earn a total of 388.00 from holding United Airlines Holdings or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Patria Investments Limited
Performance |
| Timeline |
| United Airlines Holdings |
| Patria Investments |
United Airlines and Patria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Patria Investments
The main advantage of trading using opposite United Airlines and Patria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Patria Investments 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 Patria Investments will offset losses from the drop in Patria Investments' long position.| United Airlines vs. Delta Air Lines | United Airlines vs. American Airlines Group | United Airlines vs. Alaska Air 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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