Correlation Between United Bank and Unity Foods
Can any of the company-specific risk be diversified away by investing in both United Bank and Unity Foods 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 United Bank and Unity Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bank and Unity Foods, you can compare the effects of market volatilities on United Bank and Unity Foods 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 United Bank with a short position of Unity Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bank and Unity Foods.
Diversification Opportunities for United Bank and Unity Foods
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Unity is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Bank and Unity Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Foods and United Bank 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 United Bank are associated (or correlated) with Unity Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Foods has no effect on the direction of United Bank i.e., United Bank and Unity Foods go up and down completely randomly.
Pair Corralation between United Bank and Unity Foods
Assuming the 90 days trading horizon United Bank is expected to generate 1.11 times more return on investment than Unity Foods. However, United Bank is 1.11 times more volatile than Unity Foods. It trades about 0.11 of its potential returns per unit of risk. Unity Foods is currently generating about -0.17 per unit of risk. If you would invest 36,801 in United Bank on December 30, 2024 and sell it today you would earn a total of 4,288 from holding United Bank or generate 11.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Bank vs. Unity Foods
Performance |
Timeline |
United Bank |
Unity Foods |
United Bank and Unity Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Bank and Unity Foods
The main advantage of trading using opposite United Bank and Unity Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bank position performs unexpectedly, Unity Foods 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 Unity Foods will offset losses from the drop in Unity Foods' long position.United Bank vs. National Bank of | United Bank vs. Allied Bank | United Bank vs. Aisha Steel Mills | United Bank vs. IGI Life Insurance |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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