Correlation Between United Airlines and Alvotech

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

Diversification Opportunities for United Airlines and Alvotech

-0.44

Correlation Coefficient

United Airlines  Alvotech

Very good diversification

The 3 months correlation between United and Alvotech is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech 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 Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of United Airlines i.e., United Airlines and Alvotech go up and down completely randomly.

Pair Corralation between United Airlines and Alvotech

Considering the 90-day investment horizon United Airlines Holdings is expected to under-perform the Alvotech. In addition to that, United Airlines is 1.32 times more volatile than Alvotech. It trades about 0.0 of its total potential returns per unit of risk. Alvotech is currently generating about 0.58 per unit of volatility. If you would invest  1,128  in Alvotech on October 8, 2024 and sell it today you would earn a total of  198.00  from holding Alvotech or generate 17.55% return on investment over 90 days.

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

United Airlines Holdings  vs.  Alvotech

United Airlines Holdings

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, United Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Alvotech

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with United Airlines and Alvotech

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

The idea behind United Airlines Holdings and Alvotech 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.