Correlation Between United Airlines and Mitsubishi Gas
Can any of the company-specific risk be diversified away by investing in both United Airlines and Mitsubishi Gas 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 Mitsubishi Gas 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 Mitsubishi Gas Chemical, you can compare the effects of market volatilities on United Airlines and Mitsubishi Gas 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 Mitsubishi Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Mitsubishi Gas.
Diversification Opportunities for United Airlines and Mitsubishi Gas
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Mitsubishi is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Mitsubishi Gas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Gas Chemical 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 Mitsubishi Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Gas Chemical has no effect on the direction of United Airlines i.e., United Airlines and Mitsubishi Gas go up and down completely randomly.
Pair Corralation between United Airlines and Mitsubishi Gas
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.43 times more return on investment than Mitsubishi Gas. However, United Airlines is 2.43 times more volatile than Mitsubishi Gas Chemical. It trades about 0.26 of its potential returns per unit of risk. Mitsubishi Gas Chemical is currently generating about 0.1 per unit of risk. If you would invest 9,384 in United Airlines Holdings on October 23, 2024 and sell it today you would earn a total of 1,126 from holding United Airlines Holdings or generate 12.0% 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. Mitsubishi Gas Chemical
Performance |
| Timeline |
| United Airlines Holdings |
| Mitsubishi Gas Chemical |
United Airlines and Mitsubishi Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Mitsubishi Gas
The main advantage of trading using opposite United Airlines and Mitsubishi Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Mitsubishi Gas 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 Mitsubishi Gas will offset losses from the drop in Mitsubishi Gas' long position.| United Airlines vs. Delta Air Lines | United Airlines vs. Air China Limited | United Airlines vs. AIR CHINA LTD | United Airlines vs. RYANAIR HLDGS ADR |
| Mitsubishi Gas vs. United Airlines Holdings | Mitsubishi Gas vs. Aegean Airlines SA | Mitsubishi Gas vs. COLUMBIA SPORTSWEAR | Mitsubishi Gas vs. PLAYWAY SA ZY 10 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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