Correlation Between United Airlines and Wix
Can any of the company-specific risk be diversified away by investing in both United Airlines and Wix 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 Wix 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 Wix, you can compare the effects of market volatilities on United Airlines and Wix 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 Wix. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Wix.
Diversification Opportunities for United Airlines and Wix
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Wix is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Wix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wix 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 Wix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wix has no effect on the direction of United Airlines i.e., United Airlines and Wix go up and down completely randomly.
Pair Corralation between United Airlines and Wix
Assuming the 90 days trading horizon United Airlines is expected to generate 1.14 times less return on investment than Wix. But when comparing it to its historical volatility, United Airlines Holdings is 1.2 times less risky than Wix. It trades about 0.1 of its potential returns per unit of risk. Wix is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Wix on September 14, 2024 and sell it today you would earn a total of 2,962 from holding Wix or generate 221.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Wix
Performance |
| Timeline |
| United Airlines Holdings |
| Wix |
United Airlines and Wix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Wix
The main advantage of trading using opposite United Airlines and Wix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Wix 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 Wix will offset losses from the drop in Wix'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 |
| Wix vs. Arrow Electronics, | Wix vs. Paycom Software | Wix vs. NXP Semiconductors NV | Wix vs. Metalrgica Riosulense 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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