Correlation Between United Airlines and DXC Technology
Can any of the company-specific risk be diversified away by investing in both United Airlines and DXC Technology 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 DXC Technology 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 DXC Technology, you can compare the effects of market volatilities on United Airlines and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and DXC Technology.
Diversification Opportunities for United Airlines and DXC Technology
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and DXC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and DXC Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of United Airlines i.e., United Airlines and DXC Technology go up and down completely randomly.
Pair Corralation between United Airlines and DXC Technology
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 162.61 times more return on investment than DXC Technology. However, United Airlines is 162.61 times more volatile than DXC Technology. It trades about 0.18 of its potential returns per unit of risk. DXC Technology is currently generating about 0.06 per unit of risk. If you would invest 70,000 in United Airlines Holdings on November 3, 2024 and sell it today you would earn a total of 152,680 from holding United Airlines Holdings or generate 218.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. DXC Technology
Performance |
| Timeline |
| United Airlines Holdings |
| DXC Technology |
United Airlines and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and DXC Technology
The main advantage of trading using opposite United Airlines and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| United Airlines vs. McEwen Mining | United Airlines vs. KB Home | United Airlines vs. United States Steel | United Airlines vs. Cognizant Technology Solutions |
| DXC Technology vs. Lloyds Banking Group | DXC Technology vs. Ameriprise Financial | DXC Technology vs. First Majestic Silver | DXC Technology vs. Hoteles City Express |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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