Correlation Between Uber Technologies and Commerzbank

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

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

Diversification Opportunities for Uber Technologies and Commerzbank

0.21

Correlation Coefficient

Uber Technologies  Commerzbank

Modest diversification

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

Pair Corralation between Uber Technologies and Commerzbank

Assuming the 90 days trading horizon Uber Technologies is expected to under-perform the Commerzbank. In addition to that, Uber Technologies is 1.71 times more volatile than Commerzbank AG. It trades about -0.04 of its total potential returns per unit of risk. Commerzbank AG is currently generating about 0.11 per unit of volatility. If you would invest  1,615  in Commerzbank AG on October 25, 2024 and sell it today you would earn a total of  163.00  from holding Commerzbank AG or generate 10.09% return on investment over 90 days.

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

Uber Technologies  vs.  Commerzbank AG

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Commerzbank AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commerzbank AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Commerzbank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Uber Technologies and Commerzbank

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

The idea behind Uber Technologies and Commerzbank AG 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.