Correlation Between Unit and Unit

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

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

Diversification Opportunities for Unit and Unit

0.1

Correlation Coefficient

Unit  Unit

Average diversification

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

Pair Corralation between Unit and Unit

Given the investment horizon of 90 days Unit is expected to generate 10.34 times less return on investment than Unit. But when comparing it to its historical volatility, Unit Corporation is 6.88 times less risky than Unit. It trades about 0.05 of its potential returns per unit of risk. Unit Corporation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Unit Corporation on November 28, 2024 and sell it today you would earn a total of  5.00  from holding Unit Corporation or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.38%
Values	Daily Returns

Unit Corp.  vs.  Unit Corp.

Unit

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unit Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Unit may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Unit

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unit Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Unit showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unit and Unit

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

The idea behind Unit Corporation and Unit Corporation 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.