Correlation Between United Airlines and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both United Airlines and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on United Airlines and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Fast Retailing.
Diversification Opportunities for United Airlines and Fast Retailing
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Fast is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of United Airlines i.e., United Airlines and Fast Retailing go up and down completely randomly.
Pair Corralation between United Airlines and Fast Retailing
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.49 times more return on investment than Fast Retailing. However, United Airlines is 1.49 times more volatile than Fast Retailing Co. It trades about 0.08 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.06 per unit of risk. If you would invest 4,594 in United Airlines Holdings on August 31, 2024 and sell it today you would earn a total of 4,548 from holding United Airlines Holdings or generate 99.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Fast Retailing Co
Performance |
| Timeline |
| United Airlines Holdings |
| Fast Retailing |
United Airlines and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Fast Retailing
The main advantage of trading using opposite United Airlines and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| United Airlines vs. Southwest Airlines Co | United Airlines vs. Superior Plus Corp | United Airlines vs. NMI Holdings | United Airlines vs. Origin Agritech |
| Fast Retailing vs. CHEMICAL INDUSTRIES | Fast Retailing vs. Sumitomo Chemical | Fast Retailing vs. Siamgas And Petrochemicals | Fast Retailing vs. China BlueChemical |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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