Correlation Between United Airlines and CVS Health
Can any of the company-specific risk be diversified away by investing in both United Airlines and CVS 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 CVS 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 CVS Health, you can compare the effects of market volatilities on United Airlines and CVS 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and CVS Health.
Diversification Opportunities for United Airlines and CVS Health
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and CVS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of United Airlines i.e., United Airlines and CVS Health go up and down completely randomly.
Pair Corralation between United Airlines and CVS Health
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.69 times more return on investment than CVS Health. However, United Airlines Holdings is 1.44 times less risky than CVS Health. It trades about 0.51 of its potential returns per unit of risk. CVS Health is currently generating about 0.13 per unit of risk. If you would invest 161,400 in United Airlines Holdings on August 31, 2024 and sell it today you would earn a total of 44,600 from holding United Airlines Holdings or generate 27.63% 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. CVS Health
Performance |
| Timeline |
| United Airlines Holdings |
| CVS Health |
United Airlines and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and CVS Health
The main advantage of trading using opposite United Airlines and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, CVS 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 CVS Health will offset losses from the drop in CVS Health's long position.| United Airlines vs. Southwest Airlines | United Airlines vs. McEwen Mining | United Airlines vs. Grupo Sports World | United Airlines vs. UnitedHealth Group Incorporated |
| CVS Health vs. The Select Sector | CVS Health vs. Promotora y Operadora | CVS Health vs. SPDR Series Trust | CVS Health vs. iShares Trust |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |