Correlation Between United Airlines and Apple
Can any of the company-specific risk be diversified away by investing in both United Airlines and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on United Airlines and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Apple.
Diversification Opportunities for United Airlines and Apple
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Apple is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of United Airlines i.e., United Airlines and Apple go up and down completely randomly.
Pair Corralation between United Airlines and Apple
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.89 times more return on investment than Apple. However, United Airlines is 1.89 times more volatile than Apple Inc. It trades about 0.19 of its potential returns per unit of risk. Apple Inc is currently generating about 0.13 per unit of risk. If you would invest 4,800 in United Airlines Holdings on September 3, 2024 and sell it today you would earn a total of 4,342 from holding United Airlines Holdings or generate 90.46% 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. Apple Inc
Performance |
| Timeline |
| United Airlines Holdings |
| Apple Inc |
United Airlines and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Apple
The main advantage of trading using opposite United Airlines and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| United Airlines vs. Delta Air Lines | United Airlines vs. AIR CHINA LTD | United Airlines vs. RYANAIR HLDGS ADR | United Airlines vs. Southwest Airlines Co |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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