Correlation Between United Airlines and POLARX
Can any of the company-specific risk be diversified away by investing in both United Airlines and POLARX 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 POLARX 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 POLARX LTD, you can compare the effects of market volatilities on United Airlines and POLARX 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 POLARX. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and POLARX.
Diversification Opportunities for United Airlines and POLARX
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and POLARX is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and POLARX LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLARX LTD 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 POLARX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLARX LTD has no effect on the direction of United Airlines i.e., United Airlines and POLARX go up and down completely randomly.
Pair Corralation between United Airlines and POLARX
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.17 times more return on investment than POLARX. However, United Airlines Holdings is 6.02 times less risky than POLARX. It trades about 0.02 of its potential returns per unit of risk. POLARX LTD is currently generating about -0.12 per unit of risk. If you would invest 9,000 in United Airlines Holdings on September 21, 2024 and sell it today you would earn a total of 26.00 from holding United Airlines Holdings or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. POLARX LTD
Performance |
| Timeline |
| United Airlines Holdings |
| POLARX LTD |
United Airlines and POLARX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and POLARX
The main advantage of trading using opposite United Airlines and POLARX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, POLARX 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 POLARX will offset losses from the drop in POLARX's long position.| United Airlines vs. RYANAIR HLDGS ADR | United Airlines vs. Superior Plus Corp | United Airlines vs. SIVERS SEMICONDUCTORS AB | United Airlines vs. Norsk Hydro ASA |
| POLARX vs. ELMOS SEMICONDUCTOR | POLARX vs. Caltagirone SpA | POLARX vs. Tower Semiconductor | POLARX vs. United Airlines 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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