Correlation Between United Airlines and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both United Airlines and Zurich Insurance 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 Zurich Insurance 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 Zurich Insurance Group, you can compare the effects of market volatilities on United Airlines and Zurich Insurance 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 Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Zurich Insurance.
Diversification Opportunities for United Airlines and Zurich Insurance
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Zurich is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance 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 Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of United Airlines i.e., United Airlines and Zurich Insurance go up and down completely randomly.
Pair Corralation between United Airlines and Zurich Insurance
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.86 times more return on investment than Zurich Insurance. However, United Airlines is 1.86 times more volatile than Zurich Insurance Group. It trades about 0.16 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about -0.03 per unit of risk. If you would invest 9,400 in United Airlines Holdings on October 13, 2024 and sell it today you would earn a total of 602.00 from holding United Airlines Holdings or generate 6.4% 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. Zurich Insurance Group
Performance |
| Timeline |
| United Airlines Holdings |
| Zurich Insurance |
United Airlines and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Zurich Insurance
The main advantage of trading using opposite United Airlines and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance'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 |
| Zurich Insurance vs. United Airlines Holdings | Zurich Insurance vs. Nok Airlines PCL | Zurich Insurance vs. PARKEN Sport Entertainment | Zurich Insurance vs. International Consolidated Airlines |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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