Correlation Between UIE PLC and American Airlines
Can any of the company-specific risk be diversified away by investing in both UIE PLC and American 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 UIE PLC and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UIE PLC and American Airlines Group, you can compare the effects of market volatilities on UIE PLC and American 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 UIE PLC with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of UIE PLC and American Airlines.
Diversification Opportunities for UIE PLC and American Airlines
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UIE and American is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding UIE PLC and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and UIE PLC 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 UIE PLC are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of UIE PLC i.e., UIE PLC and American Airlines go up and down completely randomly.
Pair Corralation between UIE PLC and American Airlines
Assuming the 90 days trading horizon UIE PLC is expected to generate 0.53 times more return on investment than American Airlines. However, UIE PLC is 1.9 times less risky than American Airlines. It trades about 0.02 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.0 per unit of risk. If you would invest 19,512 in UIE PLC on January 27, 2024 and sell it today you would earn a total of 2,588 from holding UIE PLC or generate 13.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
UIE PLC vs. American Airlines Group
Performance |
| Timeline |
| UIE PLC |
| American Airlines |
UIE PLC and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UIE PLC and American Airlines
The main advantage of trading using opposite UIE PLC and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UIE PLC position performs unexpectedly, American 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 American Airlines will offset losses from the drop in American Airlines' long position.| UIE PLC vs. ROCKWOOL International AS | UIE PLC vs. Tryg AS | UIE PLC vs. DSV Panalpina AS | UIE PLC vs. GN Store Nord |
| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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