Correlation Between 191216CM0 and Under Armour

Can any of the company-specific risk be diversified away by investing in both 191216CM0 and Under Armour 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 191216CM0 and Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Under Armour C, you can compare the effects of market volatilities on 191216CM0 and Under Armour 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 191216CM0 with a short position of Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216CM0 and Under Armour.

Diversification Opportunities for 191216CM0 and Under Armour

-0.01

Correlation Coefficient

191216CM0  Under Armour

Good diversification

The 3 months correlation between 191216CM0 and Under is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO and Under Armour C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour C and 191216CM0 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 COCA COLA CO are associated (or correlated) with Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour C has no effect on the direction of 191216CM0 i.e., 191216CM0 and Under Armour go up and down completely randomly.

Pair Corralation between 191216CM0 and Under Armour

Assuming the 90 days trading horizon COCA COLA CO is expected to generate 0.21 times more return on investment than Under Armour. However, COCA COLA CO is 4.84 times less risky than Under Armour. It trades about -0.21 of its potential returns per unit of risk. Under Armour C is currently generating about -0.22 per unit of risk. If you would invest  9,030  in COCA COLA CO on September 24, 2024 and sell it today you would lose (237.00) from holding COCA COLA CO or give up 2.62% of portfolio value over 90 days.

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

COCA COLA CO  vs.  Under Armour C

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CM0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Under Armour C

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour C are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Under Armour may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 191216CM0 and Under Armour

The main advantage of trading using opposite 191216CM0 and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216CM0 position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.

The idea behind COCA COLA CO and Under Armour C 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.