Correlation Between Surf Air and Union Pacific

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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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Surf Air Mobility  vs.  Union Pacific

 Performance 
       Timeline  
Surf Air Mobility 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Surf Air Mobility are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Surf Air displayed solid returns over the last few months and may actually be approaching a breakup point.
Union Pacific 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Union Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Union Pacific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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.
The idea behind Surf Air Mobility and Union Pacific 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.
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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