Correlation Between United Airlines and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both United Airlines and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines, you can compare the effects of market volatilities on United Airlines and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Singapore Airlines.
Diversification Opportunities for United Airlines and Singapore Airlines
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Singapore is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of United Airlines i.e., United Airlines and Singapore Airlines go up and down completely randomly.
Pair Corralation between United Airlines and Singapore Airlines
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 0.86 times more return on investment than Singapore Airlines. However, United Airlines Holdings is 1.17 times less risky than Singapore Airlines. It trades about 0.47 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.04 per unit of risk. If you would invest 5,562 in United Airlines Holdings on September 3, 2024 and sell it today you would earn a total of 4,121 from holding United Airlines Holdings or generate 74.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Singapore Airlines
Performance |
| Timeline |
| United Airlines Holdings |
| Singapore Airlines |
United Airlines and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Singapore Airlines
The main advantage of trading using opposite United Airlines and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' 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 |
| Singapore Airlines vs. Finnair Oyj | Singapore Airlines vs. easyJet plc | Singapore Airlines vs. Norse Atlantic ASA | Singapore Airlines vs. Air New Zealand |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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