Correlation Between System1 and Unifirst

Can any of the company-specific risk be diversified away by investing in both System1 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 System1 and Unifirst into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between System1 and Unifirst, you can compare the effects of market volatilities on System1 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 System1 with a short position of Unifirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of System1 and Unifirst.

Diversification Opportunities for System1 and Unifirst

-0.62

Correlation Coefficient

System1  Unifirst

Excellent diversification

The 3 months correlation between System1 and Unifirst is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding System1 and Unifirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifirst and System1 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 System1 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 System1 i.e., System1 and Unifirst go up and down completely randomly.

Pair Corralation between System1 and Unifirst

Considering the 90-day investment horizon System1 is expected to under-perform the Unifirst. In addition to that, System1 is 2.23 times more volatile than Unifirst. It trades about -0.12 of its total potential returns per unit of risk. Unifirst is currently generating about 0.05 per unit of volatility. If you would invest  20,081  in Unifirst on December 1, 2024 and sell it today you would earn a total of  1,411  from holding Unifirst or generate 7.03% return on investment over 90 days.

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

System1  vs.  Unifirst

System1

Risk-Adjusted Performance

Very Weak

Over the last 90 days System1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private 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 April 2025.

Pair Trading with System1 and Unifirst

The main advantage of trading using opposite System1 and Unifirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System1 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 System1 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.