Correlation Between Unico American and Wilhelmina

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

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

Diversification Opportunities for Unico American and Wilhelmina

-0.14

Correlation Coefficient

Unico American  Wilhelmina

Good diversification

The 3 months correlation between Unico and Wilhelmina is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Unico American and Wilhelmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilhelmina and Unico American 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 Unico American are associated (or correlated) with Wilhelmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilhelmina has no effect on the direction of Unico American i.e., Unico American and Wilhelmina go up and down completely randomly.

Pair Corralation between Unico American and Wilhelmina

Given the investment horizon of 90 days Unico American is expected to generate 0.84 times more return on investment than Wilhelmina. However, Unico American is 1.2 times less risky than Wilhelmina. It trades about 0.31 of its potential returns per unit of risk. Wilhelmina is currently generating about -0.09 per unit of risk. If you would invest  5.70  in Unico American on October 11, 2024 and sell it today you would earn a total of  2.41  from holding Unico American or generate 42.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Unico American  vs.  Wilhelmina

Unico American

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unico American are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Unico American displayed solid returns over the last few months and may actually be approaching a breakup point.

Wilhelmina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilhelmina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Wilhelmina is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Unico American and Wilhelmina

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

The idea behind Unico American and Wilhelmina 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.