Correlation Between United Airlines and GMxico Transportes
Can any of the company-specific risk be diversified away by investing in both United Airlines and GMxico Transportes 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 GMxico Transportes 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 GMxico Transportes SAB, you can compare the effects of market volatilities on United Airlines and GMxico Transportes 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 GMxico Transportes. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and GMxico Transportes.
Diversification Opportunities for United Airlines and GMxico Transportes
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and GMxico is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB 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 GMxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of United Airlines i.e., United Airlines and GMxico Transportes go up and down completely randomly.
Pair Corralation between United Airlines and GMxico Transportes
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.67 times more return on investment than GMxico Transportes. However, United Airlines is 1.67 times more volatile than GMxico Transportes SAB. It trades about 0.07 of its potential returns per unit of risk. GMxico Transportes SAB is currently generating about -0.02 per unit of risk. If you would invest 96,135 in United Airlines Holdings on August 27, 2024 and sell it today you would earn a total of 96,064 from holding United Airlines Holdings or generate 99.93% 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. GMxico Transportes SAB
Performance |
| Timeline |
| United Airlines Holdings |
| GMxico Transportes SAB |
United Airlines and GMxico Transportes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and GMxico Transportes
The main advantage of trading using opposite United Airlines and GMxico Transportes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, GMxico Transportes 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 GMxico Transportes will offset losses from the drop in GMxico Transportes' 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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