Correlation Between United Airlines and 1st Federal
Can any of the company-specific risk be diversified away by investing in both United Airlines and 1st Federal 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 1st Federal 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 1st Federal Savings, you can compare the effects of market volatilities on United Airlines and 1st Federal 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 1st Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and 1st Federal.
Diversification Opportunities for United Airlines and 1st Federal
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and 1st is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and 1st Federal Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Federal Savings 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 1st Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Federal Savings has no effect on the direction of United Airlines i.e., United Airlines and 1st Federal go up and down completely randomly.
Pair Corralation between United Airlines and 1st Federal
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 2.04 times more return on investment than 1st Federal. However, United Airlines is 2.04 times more volatile than 1st Federal Savings. It trades about 0.3 of its potential returns per unit of risk. 1st Federal Savings is currently generating about 0.24 per unit of risk. If you would invest 9,948 in United Airlines Holdings on October 24, 2024 and sell it today you would earn a total of 1,104 from holding United Airlines Holdings or generate 11.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. 1st Federal Savings
Performance |
| Timeline |
| United Airlines Holdings |
| 1st Federal Savings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
United Airlines and 1st Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and 1st Federal
The main advantage of trading using opposite United Airlines and 1st Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, 1st Federal 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 1st Federal will offset losses from the drop in 1st Federal's long position.| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Delta Air Lines |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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