Correlation Between United Airlines and Adriatic Metals

Can any of the company-specific risk be diversified away by investing in both United Airlines and Adriatic Metals 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 Adriatic Metals 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 Adriatic Metals, you can compare the effects of market volatilities on United Airlines and Adriatic Metals 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 Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Adriatic Metals.

Diversification Opportunities for United Airlines and Adriatic Metals

0.27

Correlation Coefficient

United Airlines  Adriatic Metals

Modest diversification

The 3 months correlation between United and Adriatic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Adriatic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals 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 Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals has no effect on the direction of United Airlines i.e., United Airlines and Adriatic Metals go up and down completely randomly.

Pair Corralation between United Airlines and Adriatic Metals

Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.99 times more return on investment than Adriatic Metals. However, United Airlines Holdings is 1.01 times less risky than Adriatic Metals. It trades about 0.06 of its potential returns per unit of risk. Adriatic Metals is currently generating about 0.02 per unit of risk. If you would invest  4,892  in United Airlines Holdings on December 1, 2024 and sell it today you would earn a total of  4,502  from holding United Airlines Holdings or generate 92.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.81%
Values	Daily Returns

United Airlines Holdings  vs.  Adriatic Metals

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. In spite of comparatively stable basic indicators, United Airlines is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Adriatic Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Adriatic Metals is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Airlines and Adriatic Metals

The main advantage of trading using opposite United Airlines and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Adriatic Metals 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.

The idea behind United Airlines Holdings and Adriatic Metals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.