Correlation Between Uber Technologies and Dixons Carphone

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

By analyzing existing cross correlation between Uber Technologies and Dixons Carphone plc, you can compare the effects of market volatilities on Uber Technologies and Dixons Carphone 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 Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Dixons Carphone.

Diversification Opportunities for Uber Technologies and Dixons Carphone

0.27

Correlation Coefficient

Uber Technologies  Dixons Carphone

Modest diversification

The 3 months correlation between Uber and Dixons is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc 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 Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Uber Technologies i.e., Uber Technologies and Dixons Carphone go up and down completely randomly.

Pair Corralation between Uber Technologies and Dixons Carphone

Given the investment horizon of 90 days Uber Technologies is expected to generate 1.5 times more return on investment than Dixons Carphone. However, Uber Technologies is 1.5 times more volatile than Dixons Carphone plc. It trades about 0.13 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.02 per unit of risk. If you would invest  6,187  in Uber Technologies on December 21, 2024 and sell it today you would earn a total of  1,248  from holding Uber Technologies or generate 20.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Uber Technologies  vs.  Dixons Carphone plc

Uber Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Dixons Carphone plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dixons Carphone plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dixons Carphone is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Uber Technologies and Dixons Carphone

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

The idea behind Uber Technologies and Dixons Carphone plc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.