Correlation Between United Airlines and BKSY WT

Can any of the company-specific risk be diversified away by investing in both United Airlines and BKSY WT 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 BKSY WT 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 BKSY WT, you can compare the effects of market volatilities on United Airlines and BKSY WT 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 BKSY WT. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and BKSY WT.

Diversification Opportunities for United Airlines and BKSY WT

0.76

Correlation Coefficient

United Airlines  BKSY WT

Poor diversification

The 3 months correlation between United and BKSY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and BKSY WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKSY WT 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 BKSY WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKSY WT has no effect on the direction of United Airlines i.e., United Airlines and BKSY WT go up and down completely randomly.

Pair Corralation between United Airlines and BKSY WT

Considering the 90-day investment horizon United Airlines is expected to generate 2.47 times less return on investment than BKSY WT. But when comparing it to its historical volatility, United Airlines Holdings is 4.53 times less risky than BKSY WT. It trades about 0.35 of its potential returns per unit of risk. BKSY WT is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3.00  in BKSY WT on September 15, 2024 and sell it today you would earn a total of  5.62  from holding BKSY WT or generate 187.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

United Airlines Holdings  vs.  BKSY WT

United Airlines Holdings

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 27 (%) 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.

BKSY WT

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKSY WT are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BKSY WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Airlines and BKSY WT

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

The idea behind United Airlines Holdings and BKSY WT 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.