Correlation Between United Airlines and Airbus SE
Can any of the company-specific risk be diversified away by investing in both United Airlines and Airbus SE 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 Airbus SE 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 Airbus SE, you can compare the effects of market volatilities on United Airlines and Airbus SE 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 Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Airbus SE.
Diversification Opportunities for United Airlines and Airbus SE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Airbus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of United Airlines i.e., United Airlines and Airbus SE go up and down completely randomly.
Pair Corralation between United Airlines and Airbus SE
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.39 times more return on investment than Airbus SE. However, United Airlines is 1.39 times more volatile than Airbus SE. It trades about 0.17 of its potential returns per unit of risk. Airbus SE is currently generating about 0.15 per unit of risk. If you would invest 8,337 in United Airlines Holdings on September 13, 2024 and sell it today you would earn a total of 879.00 from holding United Airlines Holdings or generate 10.54% 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. Airbus SE
Performance |
| Timeline |
| United Airlines Holdings |
| Airbus SE |
United Airlines and Airbus SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Airbus SE
The main advantage of trading using opposite United Airlines and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Airbus SE 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 Airbus SE will offset losses from the drop in Airbus SE's long position.| United Airlines vs. RYANAIR HLDGS ADR | United Airlines vs. Ryanair Holdings plc | United Airlines vs. Superior Plus Corp | United Airlines vs. SIVERS SEMICONDUCTORS AB |
| Airbus SE vs. Airbus SE | Airbus SE vs. General Dynamics | Airbus SE vs. Superior Plus Corp | Airbus SE vs. Origin Agritech |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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