Correlation Between United Airlines and United Fire
Can any of the company-specific risk be diversified away by investing in both United Airlines and United Fire 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 United Fire 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 United Fire Group, you can compare the effects of market volatilities on United Airlines and United Fire 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 United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and United Fire.
Diversification Opportunities for United Airlines and United Fire
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group 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 United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of United Airlines i.e., United Airlines and United Fire go up and down completely randomly.
Pair Corralation between United Airlines and United Fire
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 1.06 times more return on investment than United Fire. However, United Airlines is 1.06 times more volatile than United Fire Group. It trades about 0.15 of its potential returns per unit of risk. United Fire Group is currently generating about 0.08 per unit of risk. If you would invest 3,732 in United Airlines Holdings on September 4, 2024 and sell it today you would earn a total of 6,012 from holding United Airlines Holdings or generate 161.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. United Fire Group
Performance |
| Timeline |
| United Airlines Holdings |
| United Fire Group |
United Airlines and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and United Fire
The main advantage of trading using opposite United Airlines and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, United Fire 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 United Fire will offset losses from the drop in United Fire'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 |
| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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