Correlation Between United States and Ubisoft Entertainment

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

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

Diversification Opportunities for United States and Ubisoft Entertainment

0.21

Correlation Coefficient

United States  Ubisoft Entertainment

Modest diversification

The 3 months correlation between United and Ubisoft is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Ubisoft Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment and United States 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 United States Steel are associated (or correlated) with Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of United States i.e., United States and Ubisoft Entertainment go up and down completely randomly.

Pair Corralation between United States and Ubisoft Entertainment

Assuming the 90 days trading horizon United States Steel is expected to generate 1.94 times more return on investment than Ubisoft Entertainment. However, United States is 1.94 times more volatile than Ubisoft Entertainment SA. It trades about 0.03 of its potential returns per unit of risk. Ubisoft Entertainment SA is currently generating about -0.09 per unit of risk. If you would invest  3,153  in United States Steel on October 15, 2024 and sell it today you would earn a total of  28.00  from holding United States Steel or generate 0.89% return on investment over 90 days.

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

United States Steel  vs.  Ubisoft Entertainment SA

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubisoft Entertainment SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with United States and Ubisoft Entertainment

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

The idea behind United States Steel and Ubisoft Entertainment SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.