Correlation Between ANZNZ and United Airlines

Can any of the company-specific risk be diversified away by investing in both ANZNZ and United Airlines 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 ANZNZ and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ANZNZ 5175122 18 FEB 25 and United Airlines Holdings, you can compare the effects of market volatilities on ANZNZ and United Airlines 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 ANZNZ with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANZNZ and United Airlines.

Diversification Opportunities for ANZNZ and United Airlines

-0.84

Correlation Coefficient

ANZNZ  United Airlines

Pay attention - limited upside

The 3 months correlation between ANZNZ and United is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ANZNZ 5175122 18 FEB 25 and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings and ANZNZ 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 ANZNZ 5175122 18 FEB 25 are associated (or correlated) with United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of ANZNZ i.e., ANZNZ and United Airlines go up and down completely randomly.

Pair Corralation between ANZNZ and United Airlines

Assuming the 90 days trading horizon ANZNZ is expected to generate 79.13 times less return on investment than United Airlines. But when comparing it to its historical volatility, ANZNZ 5175122 18 FEB 25 is 48.03 times less risky than United Airlines. It trades about 0.17 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  6,001  in United Airlines Holdings on October 8, 2024 and sell it today you would earn a total of  3,566  from holding United Airlines Holdings or generate 59.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	29.03%
Values	Daily Returns

ANZNZ 5175122 18 FEB 25  vs.  United Airlines Holdings

ANZNZ 5175122 18

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ANZNZ 5175122 18 FEB 25 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ANZNZ is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

United Airlines Holdings

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, United Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANZNZ and United Airlines

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

The idea behind ANZNZ 5175122 18 FEB 25 and United Airlines Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.