Correlation Between United Airlines and TFI International
Can any of the company-specific risk be diversified away by investing in both United Airlines and TFI International 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 TFI International 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 TFI International, you can compare the effects of market volatilities on United Airlines and TFI International 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 TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and TFI International.
Diversification Opportunities for United Airlines and TFI International
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and TFI is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International 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 TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of United Airlines i.e., United Airlines and TFI International go up and down completely randomly.
Pair Corralation between United Airlines and TFI International
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 1.67 times more return on investment than TFI International. However, United Airlines is 1.67 times more volatile than TFI International. It trades about 0.15 of its potential returns per unit of risk. TFI International is currently generating about 0.01 per unit of risk. If you would invest 4,549 in United Airlines Holdings on August 27, 2024 and sell it today you would earn a total of 4,975 from holding United Airlines Holdings or generate 109.36% 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. TFI International
Performance |
| Timeline |
| United Airlines Holdings |
| TFI International |
United Airlines and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and TFI International
The main advantage of trading using opposite United Airlines and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, TFI International 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 TFI International will offset losses from the drop in TFI International's long position.| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Spirit Airlines |
| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Knight Transportation | TFI International vs. Universal Logistics Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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