Correlation Between Surf Air and Union Pacific
Can any of the company-specific risk be diversified away by investing in both Surf Air and Union Pacific 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 Surf Air and Union Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Surf Air Mobility and Union Pacific, you can compare the effects of market volatilities on Surf Air and Union Pacific 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 Surf Air with a short position of Union Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surf Air and Union Pacific.
Diversification Opportunities for Surf Air and Union Pacific
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Surf and Union is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Surf Air Mobility and Union Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Pacific and Surf Air 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 Surf Air Mobility are associated (or correlated) with Union Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Pacific has no effect on the direction of Surf Air i.e., Surf Air and Union Pacific go up and down completely randomly.
Pair Corralation between Surf Air and Union Pacific
Given the investment horizon of 90 days Surf Air Mobility is expected to generate 10.71 times more return on investment than Union Pacific. However, Surf Air is 10.71 times more volatile than Union Pacific. It trades about 0.24 of its potential returns per unit of risk. Union Pacific is currently generating about -0.05 per unit of risk. If you would invest 208.00 in Surf Air Mobility on September 11, 2024 and sell it today you would earn a total of 142.00 from holding Surf Air Mobility or generate 68.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Surf Air Mobility vs. Union Pacific
Performance |
Timeline |
Surf Air Mobility |
Union Pacific |
Surf Air and Union Pacific Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Surf Air and Union Pacific
The main advantage of trading using opposite Surf Air and Union Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surf Air position performs unexpectedly, Union Pacific 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 Union Pacific will offset losses from the drop in Union Pacific's long position.Surf Air vs. Volaris | Surf Air vs. flyExclusive, | Surf Air vs. Alaska Air Group | Surf Air vs. Copa Holdings SA |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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