Correlation Between Network 1 and Unifirst

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

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

Diversification Opportunities for Network 1 and Unifirst

0.34

Correlation Coefficient

Network 1  Unifirst

Weak diversification

The 3 months correlation between Network and Unifirst is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Network 1 Technologies and Unifirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifirst and Network 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 Network 1 Technologies are associated (or correlated) with Unifirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifirst has no effect on the direction of Network 1 i.e., Network 1 and Unifirst go up and down completely randomly.

Pair Corralation between Network 1 and Unifirst

Given the investment horizon of 90 days Network 1 Technologies is expected to generate 0.76 times more return on investment than Unifirst. However, Network 1 Technologies is 1.31 times less risky than Unifirst. It trades about 0.07 of its potential returns per unit of risk. Unifirst is currently generating about -0.2 per unit of risk. If you would invest  137.00  in Network 1 Technologies on November 28, 2024 and sell it today you would earn a total of  2.00  from holding Network 1 Technologies or generate 1.46% return on investment over 90 days.

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

Network 1 Technologies  vs.  Unifirst

Network 1 Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Network 1 Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Network 1 is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Unifirst

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unifirst are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Unifirst may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Network 1 and Unifirst

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

The idea behind Network 1 Technologies and Unifirst 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.