Correlation Between United Airlines and CSX
Can any of the company-specific risk be diversified away by investing in both United Airlines and CSX 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 CSX 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 CSX Corporation, you can compare the effects of market volatilities on United Airlines and CSX 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 CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and CSX.
Diversification Opportunities for United Airlines and CSX
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and CSX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of United Airlines i.e., United Airlines and CSX go up and down completely randomly.
Pair Corralation between United Airlines and CSX
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 2.76 times more return on investment than CSX. However, United Airlines is 2.76 times more volatile than CSX Corporation. It trades about 0.05 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.08 per unit of risk. If you would invest 7,353 in United Airlines Holdings on March 27, 2025 and sell it today you would earn a total of 549.00 from holding United Airlines Holdings or generate 7.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. CSX Corp.
Performance |
| Timeline |
| United Airlines Holdings |
| CSX Corporation |
United Airlines and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and CSX
The main advantage of trading using opposite United Airlines and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Delta Air Lines |
| CSX vs. Union Pacific | CSX vs. Canadian National Railway | CSX vs. Canadian Pacific Railway | CSX vs. Westinghouse Air Brake |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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