Correlation Between Unity Software and RBC Quant

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

By analyzing existing cross correlation between Unity Software and RBC Quant European, you can compare the effects of market volatilities on Unity Software and RBC Quant 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 RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Software and RBC Quant.

Diversification Opportunities for Unity Software and RBC Quant

-0.13

Correlation Coefficient

Unity Software  RBC Quant

Good diversification

The 3 months correlation between Unity and RBC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and RBC Quant European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant European 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 RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant European has no effect on the direction of Unity Software i.e., Unity Software and RBC Quant go up and down completely randomly.

Pair Corralation between Unity Software and RBC Quant

Taking into account the 90-day investment horizon Unity Software is expected to generate 5.34 times more return on investment than RBC Quant. However, Unity Software is 5.34 times more volatile than RBC Quant European. It trades about 0.16 of its potential returns per unit of risk. RBC Quant European is currently generating about -0.08 per unit of risk. If you would invest  1,670  in Unity Software on September 3, 2024 and sell it today you would earn a total of  741.00  from holding Unity Software or generate 44.37% return on investment over 90 days.

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

Unity Software  vs.  RBC Quant European

Unity Software

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 12 (%) 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.

RBC Quant European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC Quant European has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, RBC Quant is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Unity Software and RBC Quant

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

The idea behind Unity Software and RBC Quant European 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.