Correlation Between Intuit and United Airlines

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

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

Diversification Opportunities for Intuit and United Airlines

0.74

Correlation Coefficient

Intuit  United Airlines

Poor diversification

The 3 months correlation between Intuit and United is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc 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 Intuit 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 Intuit Inc 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 Intuit i.e., Intuit and United Airlines go up and down completely randomly.

Pair Corralation between Intuit and United Airlines

Assuming the 90 days trading horizon Intuit Inc is expected to generate 0.63 times more return on investment than United Airlines. However, Intuit Inc is 1.58 times less risky than United Airlines. It trades about -0.04 of its potential returns per unit of risk. United Airlines Holdings is currently generating about -0.04 per unit of risk. If you would invest  1,304,870  in Intuit Inc on September 25, 2024 and sell it today you would lose (19,982) from holding Intuit Inc or give up 1.53% of portfolio value over 90 days.

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

Intuit Inc  vs.  United Airlines Holdings

Intuit Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intuit Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Intuit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

United Airlines Holdings

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, United Airlines showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intuit and United Airlines

The main advantage of trading using opposite Intuit and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuit 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 Intuit Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.