Correlation Between Uber Technologies and Trade Desk

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

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

Diversification Opportunities for Uber Technologies and Trade Desk

0.43

Correlation Coefficient

Uber Technologies  Trade Desk

Very weak diversification

The 3 months correlation between Uber and Trade is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk and Uber Technologies 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 Uber Technologies are associated (or correlated) with Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Uber Technologies i.e., Uber Technologies and Trade Desk go up and down completely randomly.

Pair Corralation between Uber Technologies and Trade Desk

Assuming the 90 days trading horizon Uber Technologies is expected to generate 3.37 times less return on investment than Trade Desk. In addition to that, Uber Technologies is 1.27 times more volatile than The Trade Desk. It trades about 0.06 of its total potential returns per unit of risk. The Trade Desk is currently generating about 0.24 per unit of volatility. If you would invest  570.00  in The Trade Desk on September 3, 2024 and sell it today you would earn a total of  204.00  from holding The Trade Desk or generate 35.79% return on investment over 90 days.

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

Uber Technologies  vs.  The Trade Desk

Uber Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Trade Desk

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Trade Desk are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trade Desk sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uber Technologies and Trade Desk

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

The idea behind Uber Technologies and The Trade Desk 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.