Correlation Between United Airlines and HYDROFARM HLD
Can any of the company-specific risk be diversified away by investing in both United Airlines and HYDROFARM HLD 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 HYDROFARM HLD 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 HYDROFARM HLD GRP, you can compare the effects of market volatilities on United Airlines and HYDROFARM HLD 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 HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and HYDROFARM HLD.
Diversification Opportunities for United Airlines and HYDROFARM HLD
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and HYDROFARM is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP 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 HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of United Airlines i.e., United Airlines and HYDROFARM HLD go up and down completely randomly.
Pair Corralation between United Airlines and HYDROFARM HLD
Assuming the 90 days trading horizon United Airlines is expected to generate 1.15 times less return on investment than HYDROFARM HLD. But when comparing it to its historical volatility, United Airlines Holdings is 1.92 times less risky than HYDROFARM HLD. It trades about 0.35 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 60.00 in HYDROFARM HLD GRP on September 2, 2024 and sell it today you would earn a total of 17.00 from holding HYDROFARM HLD GRP or generate 28.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. HYDROFARM HLD GRP
Performance |
| Timeline |
| United Airlines Holdings |
| HYDROFARM HLD GRP |
United Airlines and HYDROFARM HLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and HYDROFARM HLD
The main advantage of trading using opposite United Airlines and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, HYDROFARM HLD 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 HYDROFARM HLD will offset losses from the drop in HYDROFARM HLD'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 |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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