Correlation Between Polar Capital and United Airlines

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

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

Diversification Opportunities for Polar Capital and United Airlines

0.94

Correlation Coefficient

Polar Capital  United Airlines

Almost no diversification

The 3 months correlation between Polar and United is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology 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 Polar Capital 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 Polar Capital Technology 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 Polar Capital i.e., Polar Capital and United Airlines go up and down completely randomly.

Pair Corralation between Polar Capital and United Airlines

Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.62 times more return on investment than United Airlines. However, Polar Capital Technology is 1.62 times less risky than United Airlines. It trades about -0.1 of its potential returns per unit of risk. United Airlines Holdings is currently generating about -0.13 per unit of risk. If you would invest  34,700  in Polar Capital Technology on December 28, 2024 and sell it today you would lose (4,200) from holding Polar Capital Technology or give up 12.1% of portfolio value over 90 days.

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

Polar Capital Technology  vs.  United Airlines Holdings

Polar Capital Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polar Capital Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Polar Capital and United Airlines

The main advantage of trading using opposite Polar Capital and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital 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 Polar Capital Technology 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.