Correlation Between Sportsmans Warehouse and United Airlines

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

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

Diversification Opportunities for Sportsmans Warehouse and United Airlines

0.78

Correlation Coefficient

Sportsmans Warehouse  United Airlines

Poor diversification

The 3 months correlation between Sportsmans and United is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sportsmans Warehouse Holdings 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 Sportsmans Warehouse 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 Sportsmans Warehouse Holdings 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 Sportsmans Warehouse i.e., Sportsmans Warehouse and United Airlines go up and down completely randomly.

Pair Corralation between Sportsmans Warehouse and United Airlines

Assuming the 90 days horizon Sportsmans Warehouse Holdings is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Sportsmans Warehouse Holdings is 1.0 times less risky than United Airlines. The stock trades about -0.41 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  9,500  in United Airlines Holdings on December 28, 2024 and sell it today you would lose (2,199) from holding United Airlines Holdings or give up 23.15% of portfolio value over 90 days.

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

Sportsmans Warehouse Holdings  vs.  United Airlines Holdings

Sportsmans Warehouse

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sportsmans Warehouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sportsmans Warehouse and United Airlines

The main advantage of trading using opposite Sportsmans Warehouse and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sportsmans Warehouse 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 Sportsmans Warehouse Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.