Correlation Between Bread Financial and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both Bread Financial and Uber Technologies 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 Bread Financial and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bread Financial Holdings and Uber Technologies, you can compare the effects of market volatilities on Bread Financial and Uber Technologies 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 Bread Financial with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and Uber Technologies.
Diversification Opportunities for Bread Financial and Uber Technologies
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bread and Uber is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Bread Financial 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 Bread Financial Holdings are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Bread Financial i.e., Bread Financial and Uber Technologies go up and down completely randomly.
Pair Corralation between Bread Financial and Uber Technologies
Assuming the 90 days trading horizon Bread Financial Holdings is expected to generate 2.49 times more return on investment than Uber Technologies. However, Bread Financial is 2.49 times more volatile than Uber Technologies. It trades about 0.21 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.11 per unit of risk. If you would invest 7,413 in Bread Financial Holdings on September 1, 2024 and sell it today you would earn a total of 1,473 from holding Bread Financial Holdings or generate 19.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bread Financial Holdings vs. Uber Technologies
Performance |
Timeline |
Bread Financial Holdings |
Uber Technologies |
Bread Financial and Uber Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bread Financial and Uber Technologies
The main advantage of trading using opposite Bread Financial and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.Bread Financial vs. Lloyds Banking Group | Bread Financial vs. Capital One Financial | Bread Financial vs. T Mobile | Bread Financial vs. SVB Financial Group |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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