Correlation Between Group 1 and Umpqua Holdings

Can any of the company-specific risk be diversified away by investing in both Group 1 and Umpqua Holdings 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 Group 1 and Umpqua Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Group 1 Automotive and Umpqua Holdings, you can compare the effects of market volatilities on Group 1 and Umpqua Holdings 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 Group 1 with a short position of Umpqua Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Umpqua Holdings.

Diversification Opportunities for Group 1 and Umpqua Holdings

0.0

Correlation Coefficient

Group 1  Umpqua Holdings

Pay attention - limited upside

The 3 months correlation between Group and Umpqua is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Umpqua Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umpqua Holdings and Group 1 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 Group 1 Automotive are associated (or correlated) with Umpqua Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Umpqua Holdings has no effect on the direction of Group 1 i.e., Group 1 and Umpqua Holdings go up and down completely randomly.

Pair Corralation between Group 1 and Umpqua Holdings

If you would invest (100.00) in Umpqua Holdings on December 19, 2024 and sell it today you would earn a total of  100.00  from holding Umpqua Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Group 1 Automotive  vs.  Umpqua Holdings

Group 1 Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Group 1 Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Group 1 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Umpqua Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Umpqua Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Umpqua Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Group 1 and Umpqua Holdings

The main advantage of trading using opposite Group 1 and Umpqua Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, Umpqua Holdings 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 Umpqua Holdings will offset losses from the drop in Umpqua Holdings' long position.

The idea behind Group 1 Automotive and Umpqua Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.