Correlation Between CNA Financial and Ucloudlink
Can any of the company-specific risk be diversified away by investing in both CNA Financial and Ucloudlink 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 CNA Financial and Ucloudlink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNA Financial and Ucloudlink Group, you can compare the effects of market volatilities on CNA Financial and Ucloudlink 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 CNA Financial with a short position of Ucloudlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNA Financial and Ucloudlink.
Diversification Opportunities for CNA Financial and Ucloudlink
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNA and Ucloudlink is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CNA Financial and Ucloudlink Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ucloudlink Group and CNA Financial 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 CNA Financial are associated (or correlated) with Ucloudlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ucloudlink Group has no effect on the direction of CNA Financial i.e., CNA Financial and Ucloudlink go up and down completely randomly.
Pair Corralation between CNA Financial and Ucloudlink
Considering the 90-day investment horizon CNA Financial is expected to generate 1.16 times less return on investment than Ucloudlink. But when comparing it to its historical volatility, CNA Financial is 6.39 times less risky than Ucloudlink. It trades about 0.07 of its potential returns per unit of risk. Ucloudlink Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 226.00 in Ucloudlink Group on December 2, 2024 and sell it today you would lose (99.00) from holding Ucloudlink Group or give up 43.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CNA Financial vs. Ucloudlink Group
Performance |
Timeline |
CNA Financial |
Ucloudlink Group |
CNA Financial and Ucloudlink Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CNA Financial and Ucloudlink
The main advantage of trading using opposite CNA Financial and Ucloudlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNA Financial position performs unexpectedly, Ucloudlink 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 Ucloudlink will offset losses from the drop in Ucloudlink's long position.CNA Financial vs. Selective Insurance Group | CNA Financial vs. Kemper | CNA Financial vs. Donegal Group B | CNA Financial vs. Argo Group International |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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