Correlation Between United Airlines and Waters

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

Diversification Opportunities for United Airlines and Waters

0.54

Correlation Coefficient

United Airlines  Waters

Very weak diversification

The 3 months correlation between United and Waters is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of United Airlines i.e., United Airlines and Waters go up and down completely randomly.

Pair Corralation between United Airlines and Waters

Considering the 90-day investment horizon United Airlines Holdings is expected to under-perform the Waters. In addition to that, United Airlines is 1.68 times more volatile than Waters. It trades about -0.13 of its total potential returns per unit of risk. Waters is currently generating about 0.02 per unit of volatility. If you would invest  36,816  in Waters on December 20, 2024 and sell it today you would earn a total of  318.00  from holding Waters or generate 0.86% return on investment over 90 days.

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

United Airlines Holdings  vs.  Waters

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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Waters

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Waters is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Airlines and Waters

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

The idea behind United Airlines Holdings and Waters 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.