Correlation Between Uber Technologies and MicroStrategy Incorporated

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

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

Diversification Opportunities for Uber Technologies and MicroStrategy Incorporated

-0.36

Correlation Coefficient

Uber Technologies  MicroStrategy Incorporated

Very good diversification

The 3 months correlation between Uber and MicroStrategy is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and MicroStrategy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroStrategy Incorporated 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 MicroStrategy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroStrategy Incorporated has no effect on the direction of Uber Technologies i.e., Uber Technologies and MicroStrategy Incorporated go up and down completely randomly.

Pair Corralation between Uber Technologies and MicroStrategy Incorporated

Given the investment horizon of 90 days Uber Technologies is expected to generate 0.44 times more return on investment than MicroStrategy Incorporated. However, Uber Technologies is 2.28 times less risky than MicroStrategy Incorporated. It trades about 0.12 of its potential returns per unit of risk. MicroStrategy Incorporated is currently generating about 0.02 per unit of risk. If you would invest  6,077  in Uber Technologies on December 30, 2024 and sell it today you would earn a total of  1,198  from holding Uber Technologies or generate 19.71% return on investment over 90 days.

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

Uber Technologies  vs.  MicroStrategy Incorporated

Uber Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 9 (%) 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.

MicroStrategy Incorporated

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MicroStrategy Incorporated may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Uber Technologies and MicroStrategy Incorporated

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

The idea behind Uber Technologies and MicroStrategy Incorporated 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .