Correlation Between United Airlines and Global Ship
Can any of the company-specific risk be diversified away by investing in both United Airlines and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on United Airlines and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Global Ship.
Diversification Opportunities for United Airlines and Global Ship
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Global is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of United Airlines i.e., United Airlines and Global Ship go up and down completely randomly.
Pair Corralation between United Airlines and Global Ship
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.46 times more return on investment than Global Ship. However, United Airlines is 1.46 times more volatile than Global Ship Lease. It trades about 0.07 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.04 per unit of risk. If you would invest 4,602 in United Airlines Holdings on November 1, 2024 and sell it today you would earn a total of 5,692 from holding United Airlines Holdings or generate 123.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Global Ship Lease
Performance |
| Timeline |
| United Airlines Holdings |
| Global Ship Lease |
United Airlines and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Global Ship
The main advantage of trading using opposite United Airlines and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| United Airlines vs. VIRGIN WINES UK | United Airlines vs. NAKED WINES PLC | United Airlines vs. Japan Tobacco | United Airlines vs. Indutrade AB |
| Global Ship vs. United Airlines Holdings | Global Ship vs. Micron Technology | Global Ship vs. JAPAN AIRLINES | Global Ship vs. MACOM Technology Solutions |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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