Correlation Between United Airlines and Trupanion
Can any of the company-specific risk be diversified away by investing in both United Airlines and Trupanion 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 Trupanion 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 Trupanion, you can compare the effects of market volatilities on United Airlines and Trupanion 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 Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Trupanion.
Diversification Opportunities for United Airlines and Trupanion
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Trupanion is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of United Airlines i.e., United Airlines and Trupanion go up and down completely randomly.
Pair Corralation between United Airlines and Trupanion
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.5 times more return on investment than Trupanion. However, United Airlines Holdings is 2.01 times less risky than Trupanion. It trades about 0.07 of its potential returns per unit of risk. Trupanion is currently generating about 0.01 per unit of risk. If you would invest 4,129 in United Airlines Holdings on December 5, 2024 and sell it today you would earn a total of 4,852 from holding United Airlines Holdings or generate 117.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Airlines Holdings vs. Trupanion
Performance |
Timeline |
United Airlines Holdings |
Trupanion |
United Airlines and Trupanion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Airlines and Trupanion
The main advantage of trading using opposite United Airlines and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Trupanion 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 Trupanion will offset losses from the drop in Trupanion's long position.United Airlines vs. GEELY AUTOMOBILE | United Airlines vs. Solstad Offshore ASA | United Airlines vs. Geely Automobile Holdings | United Airlines vs. Commercial Vehicle Group |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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