Correlation Between Dixons Carphone and Uber Technologies

Can any of the company-specific risk be diversified away by investing in both Dixons Carphone and Uber Technologies 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 Dixons Carphone and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dixons Carphone plc and Uber Technologies, you can compare the effects of market volatilities on Dixons Carphone and Uber Technologies 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 Dixons Carphone with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixons Carphone and Uber Technologies.

Diversification Opportunities for Dixons Carphone and Uber Technologies

-0.27

Correlation Coefficient

Dixons Carphone  Uber Technologies

Very good diversification

The 3 months correlation between Dixons and Uber is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dixons Carphone plc and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Dixons Carphone 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 Dixons Carphone plc are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Dixons Carphone i.e., Dixons Carphone and Uber Technologies go up and down completely randomly.

Pair Corralation between Dixons Carphone and Uber Technologies

Assuming the 90 days horizon Dixons Carphone is expected to generate 1.47 times less return on investment than Uber Technologies. In addition to that, Dixons Carphone is 1.34 times more volatile than Uber Technologies. It trades about 0.04 of its total potential returns per unit of risk. Uber Technologies is currently generating about 0.08 per unit of volatility. If you would invest  3,093  in Uber Technologies on October 22, 2024 and sell it today you would earn a total of  3,641  from holding Uber Technologies or generate 117.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Dixons Carphone plc  vs.  Uber Technologies

Dixons Carphone plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dixons Carphone plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dixons Carphone is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Dixons Carphone and Uber Technologies

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

The idea behind Dixons Carphone plc and Uber Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.