Correlation Between Unity Software and Cable One

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

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

Diversification Opportunities for Unity Software and Cable One

0.73

Correlation Coefficient

Unity Software  Cable One

Poor diversification

The 3 months correlation between Unity and Cable is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Unity Software i.e., Unity Software and Cable One go up and down completely randomly.

Pair Corralation between Unity Software and Cable One

Assuming the 90 days trading horizon Unity Software is expected to generate 1.49 times more return on investment than Cable One. However, Unity Software is 1.49 times more volatile than Cable One. It trades about 0.13 of its potential returns per unit of risk. Cable One is currently generating about 0.06 per unit of risk. If you would invest  429.00  in Unity Software on September 19, 2024 and sell it today you would earn a total of  326.00  from holding Unity Software or generate 75.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Unity Software  vs.  Cable One

Unity Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unity Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Cable One

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cable One sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and Cable One

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

The idea behind Unity Software and Cable One 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.