Correlation Between United Natural and United Airlines
Can any of the company-specific risk be diversified away by investing in both United Natural and United 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 United 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 United Airlines Holdings, you can compare the effects of market volatilities on United Natural and United 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and United Airlines.
Diversification Opportunities for United Natural and United Airlines
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and United is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of United Natural i.e., United Natural and United Airlines go up and down completely randomly.
Pair Corralation between United Natural and United Airlines
Assuming the 90 days horizon United Natural is expected to generate 2.44 times less return on investment than United Airlines. In addition to that, United Natural is 1.48 times more volatile than United Airlines Holdings. It trades about 0.02 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.08 per unit of volatility. If you would invest 4,594 in United Airlines Holdings on August 31, 2024 and sell it today you would earn a total of 4,548 from holding United Airlines Holdings or generate 99.0% 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. United Airlines Holdings
Performance |
| Timeline |
| United Natural Foods |
| United Airlines Holdings |
United Natural and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and United Airlines
The main advantage of trading using opposite United Natural and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, United 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 United Airlines will offset losses from the drop in United Airlines' long position.| United Natural vs. Charter Communications | United Natural vs. Perseus Mining Limited | United Natural vs. Jacquet Metal Service | United Natural vs. SBA Communications Corp |
| United Airlines vs. Southwest Airlines Co | United Airlines vs. Superior Plus Corp | United Airlines vs. NMI Holdings | United Airlines vs. Origin Agritech |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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