Correlation Between United Airlines and Grupo Sports
Can any of the company-specific risk be diversified away by investing in both United Airlines and Grupo Sports 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 Sports 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 Sports World, you can compare the effects of market volatilities on United Airlines and Grupo Sports 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 Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Grupo Sports.
Diversification Opportunities for United Airlines and Grupo Sports
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Grupo is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of United Airlines i.e., United Airlines and Grupo Sports go up and down completely randomly.
Pair Corralation between United Airlines and Grupo Sports
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.82 times more return on investment than Grupo Sports. However, United Airlines Holdings is 1.22 times less risky than Grupo Sports. It trades about 0.56 of its potential returns per unit of risk. Grupo Sports World is currently generating about 0.06 per unit of risk. If you would invest 145,000 in United Airlines Holdings on August 24, 2024 and sell it today you would earn a total of 48,000 from holding United Airlines Holdings or generate 33.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
United Airlines Holdings vs. Grupo Sports World
Performance |
| Timeline |
| United Airlines Holdings |
| Grupo Sports World |
United Airlines and Grupo Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Grupo Sports
The main advantage of trading using opposite United Airlines and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Grupo Sports 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 Sports will offset losses from the drop in Grupo Sports' long position.| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways | 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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