Correlation Between United Airlines and Futura Medical
Can any of the company-specific risk be diversified away by investing in both United Airlines and Futura Medical 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 Futura Medical 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 Futura Medical, you can compare the effects of market volatilities on United Airlines and Futura Medical 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 Futura Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Futura Medical.
Diversification Opportunities for United Airlines and Futura Medical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Futura is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of United Airlines i.e., United Airlines and Futura Medical go up and down completely randomly.
Pair Corralation between United Airlines and Futura Medical
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.39 times more return on investment than Futura Medical. However, United Airlines Holdings is 2.53 times less risky than Futura Medical. It trades about -0.02 of its potential returns per unit of risk. Futura Medical is currently generating about -0.18 per unit of risk. If you would invest 9,816 in United Airlines Holdings on December 2, 2024 and sell it today you would lose (422.00) from holding United Airlines Holdings or give up 4.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
United Airlines Holdings vs. Futura Medical
Performance |
Timeline |
United Airlines Holdings |
Futura Medical |
United Airlines and Futura Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Airlines and Futura Medical
The main advantage of trading using opposite United Airlines and Futura Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Futura Medical 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 Futura Medical will offset losses from the drop in Futura Medical's long position.United Airlines vs. Take Two Interactive Software | United Airlines vs. Cognizant Technology Solutions | United Airlines vs. Micron Technology | United Airlines vs. Scandic Hotels Group |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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