Correlation Between United Airlines and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both United Airlines and Insurance Australia 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 Insurance Australia 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 Insurance Australia Group, you can compare the effects of market volatilities on United Airlines and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Insurance Australia.
Diversification Opportunities for United Airlines and Insurance Australia
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Insurance is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of United Airlines i.e., United Airlines and Insurance Australia go up and down completely randomly.
Pair Corralation between United Airlines and Insurance Australia
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.15 times more return on investment than Insurance Australia. However, United Airlines is 2.15 times more volatile than Insurance Australia Group. It trades about 0.16 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.25 per unit of risk. If you would invest 9,661 in United Airlines Holdings on November 5, 2024 and sell it today you would earn a total of 875.00 from holding United Airlines Holdings or generate 9.06% 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. Insurance Australia Group
Performance |
| Timeline |
| United Airlines Holdings |
| Insurance Australia |
United Airlines and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Insurance Australia
The main advantage of trading using opposite United Airlines and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia'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 |
| Insurance Australia vs. Fortescue Metals Group | Insurance Australia vs. SBM OFFSHORE | Insurance Australia vs. Jacquet Metal Service | Insurance Australia vs. Transport International Holdings |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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