Correlation Between United Airlines and TRAINLINE PLC
Can any of the company-specific risk be diversified away by investing in both United Airlines and TRAINLINE PLC 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 TRAINLINE PLC 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 TRAINLINE PLC LS, you can compare the effects of market volatilities on United Airlines and TRAINLINE PLC 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 TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and TRAINLINE PLC.
Diversification Opportunities for United Airlines and TRAINLINE PLC
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and TRAINLINE is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS 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 TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of United Airlines i.e., United Airlines and TRAINLINE PLC go up and down completely randomly.
Pair Corralation between United Airlines and TRAINLINE PLC
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.07 times more return on investment than TRAINLINE PLC. However, United Airlines is 1.07 times more volatile than TRAINLINE PLC LS. It trades about 0.35 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about 0.1 per unit of risk. If you would invest 7,177 in United Airlines Holdings on September 2, 2024 and sell it today you would earn a total of 1,965 from holding United Airlines Holdings or generate 27.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. TRAINLINE PLC LS
Performance |
| Timeline |
| United Airlines Holdings |
| TRAINLINE PLC LS |
United Airlines and TRAINLINE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and TRAINLINE PLC
The main advantage of trading using opposite United Airlines and TRAINLINE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, TRAINLINE PLC 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 TRAINLINE PLC will offset losses from the drop in TRAINLINE PLC's long position.| United Airlines vs. Superior Plus Corp | United Airlines vs. NMI Holdings | United Airlines vs. Origin Agritech | United Airlines vs. SIVERS SEMICONDUCTORS AB |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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