Correlation Between Uber Technologies and Gap,

Can any of the company-specific risk be diversified away by investing in both Uber Technologies and Gap, 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 Gap, 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 Gap,, you can compare the effects of market volatilities on Uber Technologies and Gap, 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 Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Gap,.

Diversification Opportunities for Uber Technologies and Gap,

0.02

Correlation Coefficient

Uber Technologies  Gap,

Significant diversification

The 3 months correlation between Uber and Gap, is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Uber Technologies i.e., Uber Technologies and Gap, go up and down completely randomly.

Pair Corralation between Uber Technologies and Gap,

Given the investment horizon of 90 days Uber Technologies is expected to under-perform the Gap,. But the stock apears to be less risky and, when comparing its historical volatility, Uber Technologies is 1.98 times less risky than Gap,. The stock trades about -0.06 of its potential returns per unit of risk. The The Gap, is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,161  in The Gap, on September 5, 2024 and sell it today you would earn a total of  418.00  from holding The Gap, or generate 19.34% return on investment over 90 days.

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

Uber Technologies  vs.  The Gap,

Uber Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Uber Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Gap,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uber Technologies and Gap,

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

The idea behind Uber Technologies and The Gap, 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 Global Correlations module to find global opportunities by holding instruments from different markets.