Correlation Between US Physical and TomTom NV

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

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

Diversification Opportunities for US Physical and TomTom NV

0.0

Correlation Coefficient

US Physical  TomTom NV

Pay attention - limited upside

The 3 months correlation between UPH and TomTom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy and TomTom NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomTom NV and US Physical 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 US Physical Therapy are associated (or correlated) with TomTom NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomTom NV has no effect on the direction of US Physical i.e., US Physical and TomTom NV go up and down completely randomly.

Pair Corralation between US Physical and TomTom NV

If you would invest  7,511  in US Physical Therapy on October 24, 2024 and sell it today you would earn a total of  989.00  from holding US Physical Therapy or generate 13.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

US Physical Therapy  vs.  TomTom NV

US Physical Therapy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Physical Therapy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, US Physical reported solid returns over the last few months and may actually be approaching a breakup point.

TomTom NV

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days TomTom NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TomTom NV is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with US Physical and TomTom NV

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

The idea behind US Physical Therapy and TomTom NV 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.