Correlation Between United Airlines and American Public
Can any of the company-specific risk be diversified away by investing in both United Airlines and American Public 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 American Public 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 American Public Education, you can compare the effects of market volatilities on United Airlines and American Public 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 American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and American Public.
Diversification Opportunities for United Airlines and American Public
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education 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 American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of United Airlines i.e., United Airlines and American Public go up and down completely randomly.
Pair Corralation between United Airlines and American Public
Assuming the 90 days trading horizon United Airlines is expected to generate 1.25 times less return on investment than American Public. But when comparing it to its historical volatility, United Airlines Holdings is 1.45 times less risky than American Public. It trades about 0.13 of its potential returns per unit of risk. American Public Education is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 760.00 in American Public Education on September 12, 2024 and sell it today you would earn a total of 1,220 from holding American Public Education or generate 160.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. American Public Education
Performance |
| Timeline |
| United Airlines Holdings |
| American Public Education |
United Airlines and American Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and American Public
The main advantage of trading using opposite United Airlines and American Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, American Public 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 American Public will offset losses from the drop in American Public's long position.| United Airlines vs. Zijin Mining Group | United Airlines vs. Highlight Communications AG | United Airlines vs. Grupo Carso SAB | United Airlines vs. GEELY AUTOMOBILE |
| American Public vs. IDP EDUCATION LTD | American Public vs. Strategic Education | American Public vs. Laureate Education | American Public vs. Superior Plus Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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