Correlation Between Unum and Gannett

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

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

Diversification Opportunities for Unum and Gannett

0.06

Correlation Coefficient

Unum  Gannett

Significant diversification

The 3 months correlation between Unum and Gannett is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Unum Group and Gannett Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gannett and Unum 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 Unum Group are associated (or correlated) with Gannett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gannett has no effect on the direction of Unum i.e., Unum and Gannett go up and down completely randomly.

Pair Corralation between Unum and Gannett

Given the investment horizon of 90 days Unum Group is expected to under-perform the Gannett. But the stock apears to be less risky and, when comparing its historical volatility, Unum Group is 4.0 times less risky than Gannett. The stock trades about -0.29 of its potential returns per unit of risk. The Gannett Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  533.00  in Gannett Co on October 11, 2024 and sell it today you would lose (18.00) from holding Gannett Co or give up 3.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Unum Group  vs.  Gannett Co

Unum Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unum Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Unum is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Gannett

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gannett Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Gannett is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Unum and Gannett

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

The idea behind Unum Group and Gannett Co 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.