Correlation Between United Airlines and Gold Road
Can any of the company-specific risk be diversified away by investing in both United Airlines and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on United Airlines and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Gold Road.
Diversification Opportunities for United Airlines and Gold Road
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Gold is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of United Airlines i.e., United Airlines and Gold Road go up and down completely randomly.
Pair Corralation between United Airlines and Gold Road
Assuming the 90 days trading horizon United Airlines is expected to generate 2.73 times less return on investment than Gold Road. In addition to that, United Airlines is 1.22 times more volatile than Gold Road Resources. It trades about 0.12 of its total potential returns per unit of risk. Gold Road Resources is currently generating about 0.4 per unit of volatility. If you would invest 102.00 in Gold Road Resources on September 15, 2024 and sell it today you would earn a total of 24.00 from holding Gold Road Resources or generate 23.53% 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. Gold Road Resources
Performance |
| Timeline |
| United Airlines Holdings |
| Gold Road Resources |
United Airlines and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Gold Road
The main advantage of trading using opposite United Airlines and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| United Airlines vs. CODERE ONLINE LUX | United Airlines vs. SBM OFFSHORE | United Airlines vs. Marie Brizard Wine | United Airlines vs. Siamgas And Petrochemicals |
| Gold Road vs. Coor Service Management | Gold Road vs. United Airlines Holdings | Gold Road vs. Corporate Travel Management | Gold Road vs. Waste Management |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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