Correlation Between United Airlines and United Parcel
Can any of the company-specific risk be diversified away by investing in both United Airlines and United Parcel 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 United Parcel 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 United Parcel Service, you can compare the effects of market volatilities on United Airlines and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and United Parcel.
Diversification Opportunities for United Airlines and United Parcel
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and United is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of United Airlines i.e., United Airlines and United Parcel go up and down completely randomly.
Pair Corralation between United Airlines and United Parcel
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 1.45 times more return on investment than United Parcel. However, United Airlines is 1.45 times more volatile than United Parcel Service. It trades about -0.01 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.04 per unit of risk. If you would invest 5,244 in United Airlines Holdings on December 29, 2023 and sell it today you would lose (520.00) from holding United Airlines Holdings or give up 9.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Airlines Holdings vs. United Parcel Service
Performance |
Timeline |
United Airlines Holdings |
United Parcel Service |
United Airlines and United Parcel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Airlines and United Parcel
The main advantage of trading using opposite United Airlines and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, United Parcel 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 Parcel will offset losses from the drop in United Parcel's long position.United Airlines vs. Canadian Pacific Railway | United Airlines vs. Daseke Inc | United Airlines vs. Marten Transport | United Airlines vs. Werner Enterprises |
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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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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