Correlation Between United Airlines and Fibra Plus

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Can any of the company-specific risk be diversified away by investing in both United Airlines and Fibra Plus 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 Fibra Plus 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 Fibra Plus, you can compare the effects of market volatilities on United Airlines and Fibra Plus 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 Fibra Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Fibra Plus.

Diversification Opportunities for United Airlines and Fibra Plus

-0.94
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between United and Fibra is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Fibra Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Plus 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 Fibra Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Plus has no effect on the direction of United Airlines i.e., United Airlines and Fibra Plus go up and down completely randomly.

Pair Corralation between United Airlines and Fibra Plus

Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.51 times more return on investment than Fibra Plus. However, United Airlines is 2.51 times more volatile than Fibra Plus. It trades about 0.55 of its potential returns per unit of risk. Fibra Plus is currently generating about -0.03 per unit of risk. If you would invest  155,797  in United Airlines Holdings on August 30, 2024 and sell it today you would earn a total of  50,203  from holding United Airlines Holdings or generate 32.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

United Airlines Holdings  vs.  Fibra Plus

 Performance 
       Timeline  
United Airlines Holdings 

Risk-Adjusted Performance

36 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, United Airlines showed solid returns over the last few months and may actually be approaching a breakup point.
Fibra Plus 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fibra Plus has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

United Airlines and Fibra Plus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Airlines and Fibra Plus

The main advantage of trading using opposite United Airlines and Fibra Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Fibra Plus 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 Fibra Plus will offset losses from the drop in Fibra Plus' long position.
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The idea behind United Airlines Holdings and Fibra Plus pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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