Correlation Between United Airlines and Vista Oil
Can any of the company-specific risk be diversified away by investing in both United Airlines and Vista Oil 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 Vista Oil 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 Vista Oil Gas, you can compare the effects of market volatilities on United Airlines and Vista Oil 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 Vista Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Vista Oil.
Diversification Opportunities for United Airlines and Vista Oil
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Vista is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Vista Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Oil Gas 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 Vista Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Oil Gas has no effect on the direction of United Airlines i.e., United Airlines and Vista Oil go up and down completely randomly.
Pair Corralation between United Airlines and Vista Oil
Assuming the 90 days trading horizon United Airlines Holdings is expected to under-perform the Vista Oil. In addition to that, United Airlines is 1.06 times more volatile than Vista Oil Gas. It trades about -0.13 of its total potential returns per unit of risk. Vista Oil Gas is currently generating about -0.02 per unit of volatility. If you would invest 109,230 in Vista Oil Gas on September 27, 2024 and sell it today you would lose (1,430) from holding Vista Oil Gas or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Vista Oil Gas
Performance |
| Timeline |
| United Airlines Holdings |
| Vista Oil Gas |
United Airlines and Vista Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Vista Oil
The main advantage of trading using opposite United Airlines and Vista Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Vista Oil 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 Vista Oil will offset losses from the drop in Vista Oil's long position.| United Airlines vs. Grupo Hotelero Santa | United Airlines vs. Monster Beverage Corp | United Airlines vs. UnitedHealth Group Incorporated | United Airlines vs. Taiwan Semiconductor Manufacturing |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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