Correlation Between Ubisoft Entertainment and Five Below

Can any of the company-specific risk be diversified away by investing in both Ubisoft Entertainment and Five Below 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 Ubisoft Entertainment and Five Below into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ubisoft Entertainment SA and Five Below, you can compare the effects of market volatilities on Ubisoft Entertainment and Five Below 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 Ubisoft Entertainment with a short position of Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ubisoft Entertainment and Five Below.

Diversification Opportunities for Ubisoft Entertainment and Five Below

-0.1

Correlation Coefficient

Ubisoft Entertainment  Five Below

Good diversification

The 3 months correlation between Ubisoft and Five is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment SA and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Ubisoft Entertainment 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 Ubisoft Entertainment SA are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of Ubisoft Entertainment i.e., Ubisoft Entertainment and Five Below go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and Five Below

Assuming the 90 days horizon Ubisoft Entertainment SA is expected to under-perform the Five Below. In addition to that, Ubisoft Entertainment is 1.1 times more volatile than Five Below. It trades about -0.05 of its total potential returns per unit of risk. Five Below is currently generating about 0.27 per unit of volatility. If you would invest  8,670  in Five Below on September 25, 2024 and sell it today you would earn a total of  1,725  from holding Five Below or generate 19.9% return on investment over 90 days.

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

Ubisoft Entertainment SA  vs.  Five Below

Ubisoft Entertainment

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ubisoft Entertainment SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ubisoft Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Five Below

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Ubisoft Entertainment and Five Below

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

The idea behind Ubisoft Entertainment SA and Five Below 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.