Correlation Between United Airlines and Consolidated Edison

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

Diversification Opportunities for United Airlines and Consolidated Edison

-0.65

Correlation Coefficient

United Airlines  Consolidated Edison

Excellent diversification

The 3 months correlation between United and Consolidated is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison 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 Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of United Airlines i.e., United Airlines and Consolidated Edison go up and down completely randomly.

Pair Corralation between United Airlines and Consolidated Edison

Assuming the 90 days trading horizon United Airlines Holdings is expected to under-perform the Consolidated Edison. In addition to that, United Airlines is 2.12 times more volatile than Consolidated Edison. It trades about -0.14 of its total potential returns per unit of risk. Consolidated Edison is currently generating about 0.17 per unit of volatility. If you would invest  8,493  in Consolidated Edison on December 24, 2024 and sell it today you would earn a total of  1,522  from holding Consolidated Edison or generate 17.92% return on investment over 90 days.

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

United Airlines Holdings  vs.  Consolidated Edison

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 uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Consolidated Edison

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Edison are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Consolidated Edison reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Airlines and Consolidated Edison

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

The idea behind United Airlines Holdings and Consolidated Edison 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.