Correlation Between United Airlines and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both United Airlines and BRIT AMER 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 BRIT AMER 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 BRIT AMER TOBACCO, you can compare the effects of market volatilities on United Airlines and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and BRIT AMER.
Diversification Opportunities for United Airlines and BRIT AMER
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and BRIT is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of United Airlines i.e., United Airlines and BRIT AMER go up and down completely randomly.
Pair Corralation between United Airlines and BRIT AMER
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.31 times more return on investment than BRIT AMER. However, United Airlines is 2.31 times more volatile than BRIT AMER TOBACCO. It trades about 0.07 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.02 per unit of risk. If you would invest 4,067 in United Airlines Holdings on September 2, 2024 and sell it today you would earn a total of 5,075 from holding United Airlines Holdings or generate 124.78% 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. BRIT AMER TOBACCO
Performance |
| Timeline |
| United Airlines Holdings |
| BRIT AMER TOBACCO |
United Airlines and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and BRIT AMER
The main advantage of trading using opposite United Airlines and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER'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 |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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