Correlation Between United Airlines and International Consolidated
Can any of the company-specific risk be diversified away by investing in both United Airlines and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on United Airlines and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and International Consolidated.
Diversification Opportunities for United Airlines and International Consolidated
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and International is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of United Airlines i.e., United Airlines and International Consolidated go up and down completely randomly.
Pair Corralation between United Airlines and International Consolidated
Assuming the 90 days trading horizon United Airlines is expected to generate 1.45 times less return on investment than International Consolidated. In addition to that, United Airlines is 1.48 times more volatile than International Consolidated Airlines. It trades about 0.16 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.34 per unit of volatility. If you would invest 356.00 in International Consolidated Airlines on November 5, 2024 and sell it today you would earn a total of 51.00 from holding International Consolidated Airlines or generate 14.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. International Consolidated Air
Performance |
| Timeline |
| United Airlines Holdings |
| International Consolidated |
United Airlines and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and International Consolidated
The main advantage of trading using opposite United Airlines and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| United Airlines vs. Geely Automobile Holdings | United Airlines vs. VELA TECHNOLPLC LS 0001 | United Airlines vs. Kingdee International Software | United Airlines vs. ASPEN TECHINC DL |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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