Correlation Between United Airlines and Pollard Banknote
Can any of the company-specific risk be diversified away by investing in both United Airlines and Pollard Banknote 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 Pollard Banknote 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 Pollard Banknote Limited, you can compare the effects of market volatilities on United Airlines and Pollard Banknote 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 Pollard Banknote. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Pollard Banknote.
Diversification Opportunities for United Airlines and Pollard Banknote
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Pollard is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote 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 Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of United Airlines i.e., United Airlines and Pollard Banknote go up and down completely randomly.
Pair Corralation between United Airlines and Pollard Banknote
Considering the 90-day investment horizon United Airlines is expected to generate 1.93 times less return on investment than Pollard Banknote. But when comparing it to its historical volatility, United Airlines Holdings is 2.03 times less risky than Pollard Banknote. It trades about 0.26 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,610 in Pollard Banknote Limited on November 2, 2024 and sell it today you would earn a total of 371.00 from holding Pollard Banknote Limited or generate 23.04% 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. Pollard Banknote Limited
Performance |
| Timeline |
| United Airlines Holdings |
| Pollard Banknote |
United Airlines and Pollard Banknote Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Pollard Banknote
The main advantage of trading using opposite United Airlines and Pollard Banknote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Pollard Banknote 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 Pollard Banknote will offset losses from the drop in Pollard Banknote'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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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