Correlation Between United Airlines and Fibra UNO
Can any of the company-specific risk be diversified away by investing in both United Airlines and Fibra UNO 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 UNO 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 UNO, you can compare the effects of market volatilities on United Airlines and Fibra UNO 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 UNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Fibra UNO.
Diversification Opportunities for United Airlines and Fibra UNO
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Fibra is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Fibra UNO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra UNO 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 UNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra UNO has no effect on the direction of United Airlines i.e., United Airlines and Fibra UNO go up and down completely randomly.
Pair Corralation between United Airlines and Fibra UNO
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.87 times more return on investment than Fibra UNO. However, United Airlines is 1.87 times more volatile than Fibra UNO. It trades about 0.15 of its potential returns per unit of risk. Fibra UNO is currently generating about -0.06 per unit of risk. If you would invest 72,100 in United Airlines Holdings on September 14, 2024 and sell it today you would earn a total of 124,900 from holding United Airlines Holdings or generate 173.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Fibra UNO
Performance |
| Timeline |
| United Airlines Holdings |
| Fibra UNO |
United Airlines and Fibra UNO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Fibra UNO
The main advantage of trading using opposite United Airlines and Fibra UNO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Fibra UNO 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 UNO will offset losses from the drop in Fibra UNO's long position.| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines | United Airlines vs. Controladora Vuela Compaa |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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