Correlation Between Annaly Capital and United Airlines

Can any of the company-specific risk be diversified away by investing in both Annaly Capital 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 Annaly Capital and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Annaly Capital Management, and United Airlines Holdings, you can compare the effects of market volatilities on Annaly Capital 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 Annaly Capital with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and United Airlines.

Diversification Opportunities for Annaly Capital and United Airlines

0.12

Correlation Coefficient

Annaly Capital  United Airlines

Average diversification

The 3 months correlation between Annaly and United is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management, 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 Annaly Capital 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 Annaly Capital Management, 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 Annaly Capital i.e., Annaly Capital and United Airlines go up and down completely randomly.

Pair Corralation between Annaly Capital and United Airlines

Assuming the 90 days trading horizon Annaly Capital is expected to generate 1.91 times less return on investment than United Airlines. But when comparing it to its historical volatility, Annaly Capital Management, is 2.0 times less risky than United Airlines. It trades about 0.04 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13,492  in United Airlines Holdings on March 24, 2025 and sell it today you would earn a total of  7,008  from holding United Airlines Holdings or generate 51.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Annaly Capital Management,  vs.  United Airlines Holdings

Annaly Capital Manag

Risk-Adjusted Performance

Very Weak

Over the last 90 days Annaly Capital Management, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

United Airlines Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Airlines Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, United Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Annaly Capital and United Airlines

The main advantage of trading using opposite Annaly Capital and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital 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.

The idea behind Annaly Capital Management, and United Airlines Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.