Correlation Between United Airlines and UBS Group

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

Diversification Opportunities for United Airlines and UBS Group

0.41

Correlation Coefficient

United Airlines  UBS Group

Very weak diversification

The 3 months correlation between United and UBS is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of United Airlines i.e., United Airlines and UBS Group go up and down completely randomly.

Pair Corralation between United Airlines and UBS Group

Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 4.78 times more return on investment than UBS Group. However, United Airlines is 4.78 times more volatile than UBS Group AG. It trades about 0.2 of its potential returns per unit of risk. UBS Group AG is currently generating about -0.02 per unit of risk. If you would invest  161,500  in United Airlines Holdings on October 6, 2024 and sell it today you would earn a total of  35,141  from holding United Airlines Holdings or generate 21.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

United Airlines Holdings  vs.  UBS Group AG

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.

UBS Group AG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, UBS Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with United Airlines and UBS Group

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

The idea behind United Airlines Holdings and UBS Group AG 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 Commodity Directory module to find actively traded commodities issued by global exchanges.