Correlation Between Digimarc and Unisys
Can any of the company-specific risk be diversified away by investing in both Digimarc and Unisys 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 Digimarc and Unisys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digimarc and Unisys, you can compare the effects of market volatilities on Digimarc and Unisys 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 Digimarc with a short position of Unisys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and Unisys.
Diversification Opportunities for Digimarc and Unisys
Excellent diversification
The 3 months correlation between Digimarc and Unisys is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Unisys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisys and Digimarc 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 Digimarc are associated (or correlated) with Unisys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisys has no effect on the direction of Digimarc i.e., Digimarc and Unisys go up and down completely randomly.
Pair Corralation between Digimarc and Unisys
Given the investment horizon of 90 days Digimarc is expected to generate 1.01 times less return on investment than Unisys. But when comparing it to its historical volatility, Digimarc is 1.26 times less risky than Unisys. It trades about 0.05 of its potential returns per unit of risk. Unisys is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 529.00 in Unisys on November 9, 2024 and sell it today you would earn a total of 186.00 from holding Unisys or generate 35.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digimarc vs. Unisys
Performance |
| Timeline |
| Digimarc |
| Unisys |
Digimarc and Unisys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digimarc and Unisys
The main advantage of trading using opposite Digimarc and Unisys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc position performs unexpectedly, Unisys 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 Unisys will offset losses from the drop in Unisys' long position.The idea behind Digimarc and Unisys 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.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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