Correlation Between United Airlines and SIDETRADE
Can any of the company-specific risk be diversified away by investing in both United Airlines and SIDETRADE 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 SIDETRADE 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 SIDETRADE EO 1, you can compare the effects of market volatilities on United Airlines and SIDETRADE 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 SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and SIDETRADE.
Diversification Opportunities for United Airlines and SIDETRADE
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and SIDETRADE is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 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 SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of United Airlines i.e., United Airlines and SIDETRADE go up and down completely randomly.
Pair Corralation between United Airlines and SIDETRADE
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.64 times more return on investment than SIDETRADE. However, United Airlines is 2.64 times more volatile than SIDETRADE EO 1. It trades about 0.31 of its potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.1 per unit of risk. If you would invest 7,363 in United Airlines Holdings on September 1, 2024 and sell it today you would earn a total of 1,779 from holding United Airlines Holdings or generate 24.16% 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. SIDETRADE EO 1
Performance |
| Timeline |
| United Airlines Holdings |
| SIDETRADE EO 1 |
United Airlines and SIDETRADE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and SIDETRADE
The main advantage of trading using opposite United Airlines and SIDETRADE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, SIDETRADE 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 SIDETRADE will offset losses from the drop in SIDETRADE's long position.| United Airlines vs. Motorcar Parts of | United Airlines vs. Cars Inc | United Airlines vs. CARSALESCOM | United Airlines vs. Carsales |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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