Correlation Between Innovative Industrial and Uniper SE

Can any of the company-specific risk be diversified away by investing in both Innovative Industrial and Uniper SE 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 Innovative Industrial and Uniper SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innovative Industrial Properties and Uniper SE, you can compare the effects of market volatilities on Innovative Industrial and Uniper SE 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 Innovative Industrial with a short position of Uniper SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Industrial and Uniper SE.

Diversification Opportunities for Innovative Industrial and Uniper SE

0.1

Correlation Coefficient

Innovative Industrial  Uniper SE

Average diversification

The 3 months correlation between Innovative and Uniper is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Industrial Properti and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE and Innovative Industrial 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 Innovative Industrial Properties are associated (or correlated) with Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of Innovative Industrial i.e., Innovative Industrial and Uniper SE go up and down completely randomly.

Pair Corralation between Innovative Industrial and Uniper SE

Assuming the 90 days trading horizon Innovative Industrial is expected to generate 12.53 times less return on investment than Uniper SE. In addition to that, Innovative Industrial is 1.1 times more volatile than Uniper SE. It trades about 0.01 of its total potential returns per unit of risk. Uniper SE is currently generating about 0.09 per unit of volatility. If you would invest  3,877  in Uniper SE on December 25, 2024 and sell it today you would earn a total of  465.00  from holding Uniper SE or generate 11.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Innovative Industrial Properti  vs.  Uniper SE

Innovative Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovative Industrial Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Innovative Industrial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Uniper SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uniper SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Uniper SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innovative Industrial and Uniper SE

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

The idea behind Innovative Industrial Properties and Uniper SE 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 Stocks Directory module to find actively traded stocks across global markets.