Correlation Between Dave Busters and Unity Software

Can any of the company-specific risk be diversified away by investing in both Dave Busters and Unity Software 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 Dave Busters and Unity Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dave Busters Entertainment and Unity Software, you can compare the effects of market volatilities on Dave Busters and Unity Software 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 Dave Busters with a short position of Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Unity Software.

Diversification Opportunities for Dave Busters and Unity Software

-0.24

Correlation Coefficient

Dave Busters  Unity Software

Very good diversification

The 3 months correlation between Dave and Unity is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of Dave Busters i.e., Dave Busters and Unity Software go up and down completely randomly.

Pair Corralation between Dave Busters and Unity Software

Assuming the 90 days horizon Dave Busters Entertainment is expected to under-perform the Unity Software. But the stock apears to be less risky and, when comparing its historical volatility, Dave Busters Entertainment is 1.07 times less risky than Unity Software. The stock trades about -0.04 of its potential returns per unit of risk. The Unity Software is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,107  in Unity Software on October 9, 2024 and sell it today you would lose (775.00) from holding Unity Software or give up 24.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dave Busters Entertainment  vs.  Unity Software

Dave Busters Enterta

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Busters Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dave Busters may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Unity Software

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Unity Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and Unity Software

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

The idea behind Dave Busters Entertainment and Unity Software 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.