Correlation Between United Airlines and Grupo Profuturo

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

Diversification Opportunities for United Airlines and Grupo Profuturo

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between United and Grupo is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Grupo Profuturo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Profuturo 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 Grupo Profuturo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Profuturo SAB has no effect on the direction of United Airlines i.e., United Airlines and Grupo Profuturo go up and down completely randomly.

Pair Corralation between United Airlines and Grupo Profuturo

Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 4.03 times more return on investment than Grupo Profuturo. However, United Airlines is 4.03 times more volatile than Grupo Profuturo SAB. It trades about 0.45 of its potential returns per unit of risk. Grupo Profuturo SAB is currently generating about -0.1 per unit of risk. If you would invest  115,000  in United Airlines Holdings on September 5, 2024 and sell it today you would earn a total of  84,497  from holding United Airlines Holdings or generate 73.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy97.62%
ValuesDaily Returns

United Airlines Holdings  vs.  Grupo Profuturo SAB

 Performance 
       Timeline  
United Airlines Holdings 

Risk-Adjusted Performance

32 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 32 (%) 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.
Grupo Profuturo SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Profuturo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grupo Profuturo is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

United Airlines and Grupo Profuturo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Airlines and Grupo Profuturo

The main advantage of trading using opposite United Airlines and Grupo Profuturo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Grupo Profuturo 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 Grupo Profuturo will offset losses from the drop in Grupo Profuturo's long position.
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The idea behind United Airlines Holdings and Grupo Profuturo SAB 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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