Correlation Between Univest Pennsylvania and Alliance Entertainment

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

By analyzing existing cross correlation between Univest Pennsylvania and Alliance Entertainment Holding, you can compare the effects of market volatilities on Univest Pennsylvania and Alliance 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 Univest Pennsylvania with a short position of Alliance Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Univest Pennsylvania and Alliance Entertainment.

Diversification Opportunities for Univest Pennsylvania and Alliance Entertainment

-0.46

Correlation Coefficient

Univest Pennsylvania  Alliance Entertainment

Very good diversification

The 3 months correlation between Univest and Alliance is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Univest Pennsylvania and Alliance Entertainment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Entertainment and Univest Pennsylvania 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 Univest Pennsylvania are associated (or correlated) with Alliance Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Entertainment has no effect on the direction of Univest Pennsylvania i.e., Univest Pennsylvania and Alliance Entertainment go up and down completely randomly.

Pair Corralation between Univest Pennsylvania and Alliance Entertainment

Given the investment horizon of 90 days Univest Pennsylvania is expected to under-perform the Alliance Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Univest Pennsylvania is 5.87 times less risky than Alliance Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The Alliance Entertainment Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  487.00  in Alliance Entertainment Holding on December 2, 2024 and sell it today you would lose (71.00) from holding Alliance Entertainment Holding or give up 14.58% of portfolio value over 90 days.

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

Univest Pennsylvania  vs.  Alliance Entertainment Holding

Univest Pennsylvania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Univest Pennsylvania has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Univest Pennsylvania is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Alliance Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Entertainment Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alliance Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Univest Pennsylvania and Alliance Entertainment

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

The idea behind Univest Pennsylvania and Alliance Entertainment Holding 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.