Correlation Between United Airlines and Alfen NV
Can any of the company-specific risk be diversified away by investing in both United Airlines and Alfen NV 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 Alfen NV 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 Alfen NV, you can compare the effects of market volatilities on United Airlines and Alfen NV 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 Alfen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Alfen NV.
Diversification Opportunities for United Airlines and Alfen NV
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Alfen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Alfen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen NV 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 Alfen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfen NV has no effect on the direction of United Airlines i.e., United Airlines and Alfen NV go up and down completely randomly.
Pair Corralation between United Airlines and Alfen NV
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 0.84 times more return on investment than Alfen NV. However, United Airlines Holdings is 1.19 times less risky than Alfen NV. It trades about 0.07 of its potential returns per unit of risk. Alfen NV is currently generating about -0.13 per unit of risk. If you would invest 5,563 in United Airlines Holdings on August 28, 2024 and sell it today you would earn a total of 4,120 from holding United Airlines Holdings or generate 74.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
United Airlines Holdings vs. Alfen NV
Performance |
| Timeline |
| United Airlines Holdings |
| Alfen NV |
United Airlines and Alfen NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Alfen NV
The main advantage of trading using opposite United Airlines and Alfen NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Alfen NV 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 Alfen NV will offset losses from the drop in Alfen NV's long position.| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Spirit Airlines |
| Alfen NV vs. Copa Holdings SA | Alfen NV vs. United Airlines Holdings | Alfen NV vs. Delta Air Lines | Alfen NV vs. SkyWest |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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