Correlation Between Uniper SE and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Uniper SE and Alliance Data 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 Uniper SE and Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniper SE and Alliance Data Systems, you can compare the effects of market volatilities on Uniper SE and Alliance Data 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 Uniper SE with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniper SE and Alliance Data.
Diversification Opportunities for Uniper SE and Alliance Data
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Uniper and Alliance is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and Uniper SE 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 Uniper SE are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Uniper SE i.e., Uniper SE and Alliance Data go up and down completely randomly.
Pair Corralation between Uniper SE and Alliance Data
Assuming the 90 days trading horizon Uniper SE is expected to under-perform the Alliance Data. In addition to that, Uniper SE is 1.06 times more volatile than Alliance Data Systems. It trades about -0.09 of its total potential returns per unit of risk. Alliance Data Systems is currently generating about 0.09 per unit of volatility. If you would invest 5,947 in Alliance Data Systems on September 24, 2024 and sell it today you would earn a total of 184.00 from holding Alliance Data Systems or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Uniper SE vs. Alliance Data Systems
Performance |
| Timeline |
| Uniper SE |
| Alliance Data Systems |
Uniper SE and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniper SE and Alliance Data
The main advantage of trading using opposite Uniper SE and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniper SE position performs unexpectedly, Alliance Data 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 Data will offset losses from the drop in Alliance Data's long position.| Uniper SE vs. Mulberry Group PLC | Uniper SE vs. London Security Plc | Uniper SE vs. Triad Group PLC | Uniper SE vs. SURETRACK MON |
| Alliance Data vs. Uniper SE | Alliance Data vs. Mulberry Group PLC | Alliance Data vs. London Security Plc | Alliance Data vs. Triad Group PLC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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