Correlation Between United Airlines and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both United Airlines and Niagara Mohawk 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 Niagara Mohawk 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 Niagara Mohawk Power, you can compare the effects of market volatilities on United Airlines and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Niagara Mohawk.
Diversification Opportunities for United Airlines and Niagara Mohawk
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Niagara is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of United Airlines i.e., United Airlines and Niagara Mohawk go up and down completely randomly.
Pair Corralation between United Airlines and Niagara Mohawk
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 1.07 times more return on investment than Niagara Mohawk. However, United Airlines is 1.07 times more volatile than Niagara Mohawk Power. It trades about 0.08 of its potential returns per unit of risk. Niagara Mohawk Power is currently generating about 0.0 per unit of risk. If you would invest 4,280 in United Airlines Holdings on August 29, 2024 and sell it today you would earn a total of 5,371 from holding United Airlines Holdings or generate 125.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 61.29% |
| Values | Daily Returns |
United Airlines Holdings vs. Niagara Mohawk Power
Performance |
| Timeline |
| United Airlines Holdings |
| Niagara Mohawk Power |
United Airlines and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Niagara Mohawk
The main advantage of trading using opposite United Airlines and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.| United Airlines vs. JetBlue Airways Corp | United Airlines vs. Allegiant Travel | United Airlines vs. SkyWest | United Airlines vs. International Consolidated Airlines |
| Niagara Mohawk vs. Scholastic | Niagara Mohawk vs. CVR Partners LP | Niagara Mohawk vs. NL Industries | Niagara Mohawk vs. Avient Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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