Correlation Between United Airlines and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both United Airlines and Avanos Medical 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 Avanos Medical 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 Avanos Medical, you can compare the effects of market volatilities on United Airlines and Avanos Medical 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 Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Avanos Medical.
Diversification Opportunities for United Airlines and Avanos Medical
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Avanos is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical 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 Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of United Airlines i.e., United Airlines and Avanos Medical go up and down completely randomly.
Pair Corralation between United Airlines and Avanos Medical
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.13 times more return on investment than Avanos Medical. However, United Airlines is 1.13 times more volatile than Avanos Medical. It trades about 0.2 of its potential returns per unit of risk. Avanos Medical is currently generating about 0.01 per unit of risk. If you would invest 4,813 in United Airlines Holdings on August 29, 2024 and sell it today you would earn a total of 4,704 from holding United Airlines Holdings or generate 97.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Avanos Medical
Performance |
| Timeline |
| United Airlines Holdings |
| Avanos Medical |
United Airlines and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Avanos Medical
The main advantage of trading using opposite United Airlines and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| United Airlines vs. Treasury Wine Estates | United Airlines vs. Hochschild Mining plc | United Airlines vs. LIFENET INSURANCE CO | United Airlines vs. PENN NATL GAMING |
| Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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