Correlation Between Unity Software and Mainstay Large

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

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

Diversification Opportunities for Unity Software and Mainstay Large

0.62

Correlation Coefficient

Unity Software  Mainstay Large

Poor diversification

The 3 months correlation between Unity and Mainstay is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap and Unity Software 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 Unity Software are associated (or correlated) with Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Unity Software i.e., Unity Software and Mainstay Large go up and down completely randomly.

Pair Corralation between Unity Software and Mainstay Large

Taking into account the 90-day investment horizon Unity Software is expected to generate 4.67 times more return on investment than Mainstay Large. However, Unity Software is 4.67 times more volatile than Mainstay Large Cap. It trades about 0.38 of its potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.14 per unit of risk. If you would invest  1,922  in Unity Software on September 13, 2024 and sell it today you would earn a total of  733.00  from holding Unity Software or generate 38.14% return on investment over 90 days.

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

Unity Software  vs.  Mainstay Large Cap

Unity Software

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Unity Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mainstay Large Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mainstay Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Unity Software and Mainstay Large

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

The idea behind Unity Software and Mainstay Large Cap 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.