Correlation Between United Airlines and Universal Health
Can any of the company-specific risk be diversified away by investing in both United Airlines and Universal Health 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 Universal Health 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 Universal Health Services,, you can compare the effects of market volatilities on United Airlines and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Universal Health.
Diversification Opportunities for United Airlines and Universal Health
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Universal is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Universal Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Ser 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Ser has no effect on the direction of United Airlines i.e., United Airlines and Universal Health go up and down completely randomly.
Pair Corralation between United Airlines and Universal Health
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.27 times more return on investment than Universal Health. However, United Airlines is 1.27 times more volatile than Universal Health Services,. It trades about 0.36 of its potential returns per unit of risk. Universal Health Services, is currently generating about 0.0 per unit of risk. If you would invest 17,782 in United Airlines Holdings on October 14, 2024 and sell it today you would earn a total of 14,818 from holding United Airlines Holdings or generate 83.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Universal Health Services,
Performance |
| Timeline |
| United Airlines Holdings |
| Universal Health Ser |
United Airlines and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Universal Health
The main advantage of trading using opposite United Airlines and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| United Airlines vs. TechnipFMC plc | United Airlines vs. Caesars Entertainment, | United Airlines vs. United States Steel | United Airlines vs. DENTSPLY SIRONA |
| Universal Health vs. Burlington Stores, | Universal Health vs. New Oriental Education | Universal Health vs. United Airlines Holdings | Universal Health vs. STAG Industrial, |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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