Correlation Between United Airlines and Wayside Technology

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

Diversification Opportunities for United Airlines and Wayside Technology

0.94

Correlation Coefficient

United Airlines  Wayside Technology

Almost no diversification

The 3 months correlation between United and Wayside is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology 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 Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of United Airlines i.e., United Airlines and Wayside Technology go up and down completely randomly.

Pair Corralation between United Airlines and Wayside Technology

Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.89 times more return on investment than Wayside Technology. However, United Airlines Holdings is 1.12 times less risky than Wayside Technology. It trades about 0.31 of its potential returns per unit of risk. Wayside Technology Group is currently generating about 0.15 per unit of risk. If you would invest  5,350  in United Airlines Holdings on October 8, 2024 and sell it today you would earn a total of  3,816  from holding United Airlines Holdings or generate 71.33% return on investment over 90 days.

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

United Airlines Holdings  vs.  Wayside Technology Group

United Airlines Holdings

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 24 (%) 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.

Wayside Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wayside Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Airlines and Wayside Technology

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

The idea behind United Airlines Holdings and Wayside Technology Group 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.