Correlation Between Globalfoundries and Uber Technologies

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

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

Diversification Opportunities for Globalfoundries and Uber Technologies

-0.48

Correlation Coefficient

Globalfoundries  Uber Technologies

Very good diversification

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

Pair Corralation between Globalfoundries and Uber Technologies

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Uber Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Globalfoundries is 1.17 times less risky than Uber Technologies. The stock trades about -0.08 of its potential returns per unit of risk. The Uber Technologies is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,342  in Uber Technologies on October 26, 2024 and sell it today you would lose (486.00) from holding Uber Technologies or give up 6.62% of portfolio value over 90 days.

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

Globalfoundries  vs.  Uber Technologies

Globalfoundries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries may actually be approaching a critical reversion point that can send shares even higher in February 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 unfluctuating 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 Globalfoundries and Uber Technologies

The main advantage of trading using opposite Globalfoundries and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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 Globalfoundries 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.