Correlation Between United Airlines and ARK Venture

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

Diversification Opportunities for United Airlines and ARK Venture

0.42

Correlation Coefficient

United Airlines  ARK Venture

Very weak diversification

The 3 months correlation between United and ARK is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and ARK Venture Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Venture Fund 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 ARK Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Venture Fund has no effect on the direction of United Airlines i.e., United Airlines and ARK Venture go up and down completely randomly.

Pair Corralation between United Airlines and ARK Venture

Considering the 90-day investment horizon United Airlines Holdings is expected to under-perform the ARK Venture. In addition to that, United Airlines is 4.16 times more volatile than ARK Venture Fund. It trades about -0.22 of its total potential returns per unit of risk. ARK Venture Fund is currently generating about -0.15 per unit of volatility. If you would invest  3,061  in ARK Venture Fund on December 4, 2024 and sell it today you would lose (65.00) from holding ARK Venture Fund or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

United Airlines Holdings  vs.  ARK Venture Fund

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. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

ARK Venture Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Venture Fund are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, ARK Venture is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Airlines and ARK Venture

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

The idea behind United Airlines Holdings and ARK Venture Fund 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.