Correlation Between United Natural and American Airlines
Can any of the company-specific risk be diversified away by investing in both United Natural and American Airlines 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 Natural and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and American Airlines Group, you can compare the effects of market volatilities on United Natural and American Airlines 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 Natural with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and American Airlines.
Diversification Opportunities for United Natural and American Airlines
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and American is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and United Natural 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 Natural Foods are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of United Natural i.e., United Natural and American Airlines go up and down completely randomly.
Pair Corralation between United Natural and American Airlines
Assuming the 90 days horizon United Natural Foods is expected to generate 0.82 times more return on investment than American Airlines. However, United Natural Foods is 1.22 times less risky than American Airlines. It trades about 0.13 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.0 per unit of risk. If you would invest 2,584 in United Natural Foods on November 1, 2024 and sell it today you would earn a total of 154.00 from holding United Natural Foods or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. American Airlines Group
Performance |
| Timeline |
| United Natural Foods |
| American Airlines |
United Natural and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and American Airlines
The main advantage of trading using opposite United Natural and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| United Natural vs. Datadog | United Natural vs. MAVEN WIRELESS SWEDEN | United Natural vs. 24SEVENOFFICE GROUP AB | United Natural vs. DATAGROUP SE |
| American Airlines vs. EBRO FOODS | American Airlines vs. GWILLI FOOD | American Airlines vs. United Natural Foods | American Airlines vs. MAGNUM MINING EXP |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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