Correlation Between Fica Empreendimentos and United Airlines

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

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

Diversification Opportunities for Fica Empreendimentos and United Airlines

0.73

Correlation Coefficient

Fica Empreendimentos  United Airlines

Poor diversification

The 3 months correlation between Fica and United is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fica Empreendimentos Imobiliar 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 Fica Empreendimentos 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 Fica Empreendimentos Imobiliarios 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 Fica Empreendimentos i.e., Fica Empreendimentos and United Airlines go up and down completely randomly.

Pair Corralation between Fica Empreendimentos and United Airlines

Assuming the 90 days trading horizon Fica Empreendimentos is expected to generate 4.5 times less return on investment than United Airlines. In addition to that, Fica Empreendimentos is 1.35 times more volatile than United Airlines Holdings. It trades about 0.07 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.4 per unit of volatility. If you would invest  14,218  in United Airlines Holdings on September 13, 2024 and sell it today you would earn a total of  15,246  from holding United Airlines Holdings or generate 107.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Fica Empreendimentos Imobiliar  vs.  United Airlines Holdings

Fica Empreendimentos

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fica Empreendimentos Imobiliarios are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fica Empreendimentos unveiled solid returns over the last few months and may actually be approaching a breakup point.

United Airlines Holdings

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, United Airlines sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fica Empreendimentos and United Airlines

The main advantage of trading using opposite Fica Empreendimentos and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fica Empreendimentos 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 Fica Empreendimentos Imobiliarios 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 Transaction History module to view history of all your transactions and understand their impact on performance.