Correlation Between United Airlines and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both United Airlines and Costco Wholesale 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 Costco Wholesale 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 Costco Wholesale, you can compare the effects of market volatilities on United Airlines and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Costco Wholesale.
Diversification Opportunities for United Airlines and Costco Wholesale
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Costco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of United Airlines i.e., United Airlines and Costco Wholesale go up and down completely randomly.
Pair Corralation between United Airlines and Costco Wholesale
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.33 times more return on investment than Costco Wholesale. However, United Airlines is 1.33 times more volatile than Costco Wholesale. It trades about 0.37 of its potential returns per unit of risk. Costco Wholesale is currently generating about 0.29 per unit of risk. If you would invest 162,100 in United Airlines Holdings on September 2, 2024 and sell it today you would earn a total of 34,700 from holding United Airlines Holdings or generate 21.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
United Airlines Holdings vs. Costco Wholesale
Performance |
| Timeline |
| United Airlines Holdings |
| Costco Wholesale |
United Airlines and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Costco Wholesale
The main advantage of trading using opposite United Airlines and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| United Airlines vs. Grupo Hotelero Santa | United Airlines vs. UnitedHealth Group Incorporated | United Airlines vs. Micron Technology | United Airlines vs. Delta Air Lines |
| Costco Wholesale vs. Hoteles City Express | Costco Wholesale vs. Monster Beverage Corp | Costco Wholesale vs. Grupo Hotelero Santa | Costco Wholesale vs. FibraHotel |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |