Correlation Between Employers Holdings and Uber Technologies

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

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

Diversification Opportunities for Employers Holdings and Uber Technologies

-0.48

Correlation Coefficient

Employers Holdings  Uber Technologies

Very good diversification

The 3 months correlation between Employers and Uber is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Employers Holdings 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 Employers Holdings 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 Employers Holdings i.e., Employers Holdings and Uber Technologies go up and down completely randomly.

Pair Corralation between Employers Holdings and Uber Technologies

Considering the 90-day investment horizon Employers Holdings is expected to generate 0.24 times more return on investment than Uber Technologies. However, Employers Holdings is 4.12 times less risky than Uber Technologies. It trades about -0.13 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.23 per unit of risk. If you would invest  5,359  in Employers Holdings on September 12, 2024 and sell it today you would lose (111.00) from holding Employers Holdings or give up 2.07% of portfolio value over 90 days.

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

Employers Holdings  vs.  Uber Technologies

Employers Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Employers Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 latest inconsistent performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Employers Holdings and Uber Technologies

The main advantage of trading using opposite Employers Holdings and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings 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 Employers Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.