Correlation Between United Airlines and Nova Lithium
Can any of the company-specific risk be diversified away by investing in both United Airlines and Nova Lithium 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 Nova Lithium 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 Nova Lithium Corp, you can compare the effects of market volatilities on United Airlines and Nova Lithium 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 Nova Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Nova Lithium.
Diversification Opportunities for United Airlines and Nova Lithium
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Nova is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Nova Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Lithium Corp 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 Nova Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Lithium Corp has no effect on the direction of United Airlines i.e., United Airlines and Nova Lithium go up and down completely randomly.
Pair Corralation between United Airlines and Nova Lithium
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 0.63 times more return on investment than Nova Lithium. However, United Airlines Holdings is 1.58 times less risky than Nova Lithium. It trades about 0.35 of its potential returns per unit of risk. Nova Lithium Corp is currently generating about -0.11 per unit of risk. If you would invest 6,353 in United Airlines Holdings on September 13, 2024 and sell it today you would earn a total of 3,461 from holding United Airlines Holdings or generate 54.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
United Airlines Holdings vs. Nova Lithium Corp
Performance |
| Timeline |
| United Airlines Holdings |
| Nova Lithium Corp |
United Airlines and Nova Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Nova Lithium
The main advantage of trading using opposite United Airlines and Nova Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Nova Lithium 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 Nova Lithium will offset losses from the drop in Nova Lithium'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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