Correlation Between United Airlines and Keyence
Can any of the company-specific risk be diversified away by investing in both United Airlines and Keyence 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 Keyence 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 Keyence, you can compare the effects of market volatilities on United Airlines and Keyence 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 Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Keyence.
Diversification Opportunities for United Airlines and Keyence
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Keyence is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence 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 Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of United Airlines i.e., United Airlines and Keyence go up and down completely randomly.
Pair Corralation between United Airlines and Keyence
Assuming the 90 days trading horizon United Airlines is expected to generate 1.23 times less return on investment than Keyence. But when comparing it to its historical volatility, United Airlines Holdings is 1.62 times less risky than Keyence. It trades about 0.08 of its potential returns per unit of risk. Keyence is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,688 in Keyence on September 14, 2024 and sell it today you would earn a total of 26,012 from holding Keyence or generate 177.1% 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. Keyence
Performance |
| Timeline |
| United Airlines Holdings |
| Keyence |
United Airlines and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Keyence
The main advantage of trading using opposite United Airlines and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence's long position.| United Airlines vs. RYANAIR HLDGS ADR | United Airlines vs. Ryanair Holdings plc | United Airlines vs. Superior Plus Corp | United Airlines vs. SIVERS SEMICONDUCTORS AB |
| Keyence vs. Aedas Homes SA | Keyence vs. bet at home AG | Keyence vs. United Airlines Holdings | Keyence vs. Focus Home Interactive |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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