Correlation Between Upstart Holdings and City Developments

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

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

Diversification Opportunities for Upstart Holdings and City Developments

-0.56

Correlation Coefficient

Upstart Holdings  City Developments

Excellent diversification

The 3 months correlation between Upstart and City is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings and City Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Developments and Upstart Holdings 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 Upstart Holdings are associated (or correlated) with City Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Developments has no effect on the direction of Upstart Holdings i.e., Upstart Holdings and City Developments go up and down completely randomly.

Pair Corralation between Upstart Holdings and City Developments

Given the investment horizon of 90 days Upstart Holdings is expected to under-perform the City Developments. In addition to that, Upstart Holdings is 2.53 times more volatile than City Developments. It trades about -0.07 of its total potential returns per unit of risk. City Developments is currently generating about 0.02 per unit of volatility. If you would invest  370.00  in City Developments on December 19, 2024 and sell it today you would earn a total of  7.00  from holding City Developments or generate 1.89% return on investment over 90 days.

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

Upstart Holdings  vs.  City Developments

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

City Developments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in City Developments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, City Developments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Upstart Holdings and City Developments

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

The idea behind Upstart Holdings and City Developments 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.