Correlation Between Uber Technologies and Merit Group
Can any of the company-specific risk be diversified away by investing in both Uber Technologies and Merit Group 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 Merit Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Merit Group PLC, you can compare the effects of market volatilities on Uber Technologies and Merit Group 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 Merit Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Merit Group.
Diversification Opportunities for Uber Technologies and Merit Group
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Uber and Merit is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Merit Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Group PLC 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 Merit Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Group PLC has no effect on the direction of Uber Technologies i.e., Uber Technologies and Merit Group go up and down completely randomly.
Pair Corralation between Uber Technologies and Merit Group
Assuming the 90 days trading horizon Uber Technologies is expected to generate 0.48 times more return on investment than Merit Group. However, Uber Technologies is 2.1 times less risky than Merit Group. It trades about 0.21 of its potential returns per unit of risk. Merit Group PLC is currently generating about -0.34 per unit of risk. If you would invest 6,920 in Uber Technologies on August 30, 2024 and sell it today you would earn a total of 310.00 from holding Uber Technologies or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uber Technologies vs. Merit Group PLC
Performance |
| Timeline |
| Uber Technologies |
| Merit Group PLC |
Uber Technologies and Merit Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Merit Group
The main advantage of trading using opposite Uber Technologies and Merit Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies position performs unexpectedly, Merit Group 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 Merit Group will offset losses from the drop in Merit Group's long position.| Uber Technologies vs. Samsung Electronics Co | Uber Technologies vs. Samsung Electronics Co | Uber Technologies vs. Toyota Motor Corp | Uber Technologies vs. Reliance Industries Ltd |
| Merit Group vs. Raytheon Technologies Corp | Merit Group vs. Ashtead Technology Holdings | Merit Group vs. Science in Sport | Merit Group vs. Uber Technologies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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