Correlation Between Bread Financial and Unity Software
Can any of the company-specific risk be diversified away by investing in both Bread Financial and Unity Software 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 Unity Software 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 Unity Software, you can compare the effects of market volatilities on Bread Financial and Unity Software 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 Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and Unity Software.
Diversification Opportunities for Bread Financial and Unity Software
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bread and Unity is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software 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 Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of Bread Financial i.e., Bread Financial and Unity Software go up and down completely randomly.
Pair Corralation between Bread Financial and Unity Software
Assuming the 90 days trading horizon Bread Financial Holdings is expected to generate 0.76 times more return on investment than Unity Software. However, Bread Financial Holdings is 1.32 times less risky than Unity Software. It trades about 0.05 of its potential returns per unit of risk. Unity Software is currently generating about 0.01 per unit of risk. If you would invest 5,005 in Bread Financial Holdings on September 3, 2024 and sell it today you would earn a total of 3,881 from holding Bread Financial Holdings or generate 77.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.6% |
| Values | Daily Returns |
Bread Financial Holdings vs. Unity Software
Performance |
| Timeline |
| Bread Financial Holdings |
| Unity Software |
Bread Financial and Unity Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bread Financial and Unity Software
The main advantage of trading using opposite Bread Financial and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, Unity Software 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 Unity Software will offset losses from the drop in Unity Software's long position.| Bread Financial vs. Visa Inc | Bread Financial vs. Capital One Financial | Bread Financial vs. Credit Acceptance |
| Unity Software vs. United States Steel | Unity Software vs. Agilent Technologies | Unity Software vs. Unifique Telecomunicaes SA | Unity Software vs. Palantir 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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