Correlation Between United Airlines and Compagnie Financière
Can any of the company-specific risk be diversified away by investing in both United Airlines and Compagnie Financière 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 Compagnie Financière 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 Compagnie Financire Richemont, you can compare the effects of market volatilities on United Airlines and Compagnie Financière 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 Compagnie Financière. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Compagnie Financière.
Diversification Opportunities for United Airlines and Compagnie Financière
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Compagnie is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financière 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 Compagnie Financière. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financière has no effect on the direction of United Airlines i.e., United Airlines and Compagnie Financière go up and down completely randomly.
Pair Corralation between United Airlines and Compagnie Financière
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.5 times more return on investment than Compagnie Financière. However, United Airlines is 1.5 times more volatile than Compagnie Financire Richemont. It trades about 0.18 of its potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.12 per unit of risk. If you would invest 9,126 in United Airlines Holdings on October 14, 2024 and sell it today you would earn a total of 876.00 from holding United Airlines Holdings or generate 9.6% 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. Compagnie Financire Richemont
Performance |
| Timeline |
| United Airlines Holdings |
| Compagnie Financière |
United Airlines and Compagnie Financière Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Compagnie Financière
The main advantage of trading using opposite United Airlines and Compagnie Financière positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Compagnie Financière 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 Compagnie Financière will offset losses from the drop in Compagnie Financière's long position.| United Airlines vs. LANDSEA GREEN MANAGEMENT | United Airlines vs. Coor Service Management | United Airlines vs. COFCO Joycome Foods | United Airlines vs. AGF Management Limited |
| Compagnie Financière vs. SINGAPORE AIRLINES | Compagnie Financière vs. Guidewire Software | Compagnie Financière vs. Magic Software Enterprises | Compagnie Financière 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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