Correlation Between United Airlines and Biogen

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

Diversification Opportunities for United Airlines and Biogen

0.0

Correlation Coefficient

United Airlines  Biogen

Pay attention - limited upside

The 3 months correlation between United and Biogen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of United Airlines i.e., United Airlines and Biogen go up and down completely randomly.

Pair Corralation between United Airlines and Biogen

If you would invest  5,200  in United Airlines Holdings on October 4, 2024 and sell it today you would earn a total of  4,300  from holding United Airlines Holdings or generate 82.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

United Airlines Holdings  vs.  Biogen Inc

United Airlines Holdings

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, United Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Biogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with United Airlines and Biogen

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

The idea behind United Airlines Holdings and Biogen Inc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.