Correlation Between Young Cos and United Airlines
Can any of the company-specific risk be diversified away by investing in both Young Cos 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 Young Cos and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and United Airlines Holdings, you can compare the effects of market volatilities on Young Cos 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 Young Cos with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and United Airlines.
Diversification Opportunities for Young Cos and United Airlines
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Young and United is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery 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 Young Cos 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 Young Cos Brewery 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 Young Cos i.e., Young Cos and United Airlines go up and down completely randomly.
Pair Corralation between Young Cos and United Airlines
Assuming the 90 days trading horizon Young Cos is expected to generate 10.08 times less return on investment than United Airlines. But when comparing it to its historical volatility, Young Cos Brewery is 1.65 times less risky than United Airlines. It trades about 0.07 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 7,338 in United Airlines Holdings on August 25, 2024 and sell it today you would earn a total of 1,922 from holding United Airlines Holdings or generate 26.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Cos Brewery vs. United Airlines Holdings
Performance |
| Timeline |
| Young Cos Brewery |
| United Airlines Holdings |
Young Cos and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and United Airlines
The main advantage of trading using opposite Young Cos and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos 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.| Young Cos vs. Toyota Motor Corp | Young Cos vs. SoftBank Group Corp | Young Cos vs. State Bank of | Young Cos vs. Freddie Mac |
| United Airlines vs. Quadrise Plc | United Airlines vs. Intuitive Investments Group | United Airlines vs. European Metals Holdings | United Airlines vs. Athelney Trust plc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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