Correlation Between United Airlines and Check Point

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

Diversification Opportunities for United Airlines and Check Point

-0.2

Correlation Coefficient

United Airlines  Check Point

Good diversification

The 3 months correlation between United and Check is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software 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 Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of United Airlines i.e., United Airlines and Check Point go up and down completely randomly.

Pair Corralation between United Airlines and Check Point

Assuming the 90 days trading horizon United Airlines is expected to generate 1.05 times less return on investment than Check Point. In addition to that, United Airlines is 2.32 times more volatile than Check Point Software. It trades about 0.07 of its total potential returns per unit of risk. Check Point Software is currently generating about 0.18 per unit of volatility. If you would invest  17,310  in Check Point Software on September 23, 2024 and sell it today you would earn a total of  785.00  from holding Check Point Software or generate 4.53% return on investment over 90 days.

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

United Airlines Holdings  vs.  Check Point Software

United Airlines Holdings

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, United Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Check Point Software

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Check Point 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 Check Point

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

The idea behind United Airlines Holdings and Check Point Software 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..