Correlation Between Transport International and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Uber Technologies, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Uber Technologies.
Diversification Opportunities for Transport International and Uber Technologies
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transport and Uber is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Transport International 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 Transport International 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 Transport International i.e., Transport International and Uber Technologies go up and down completely randomly.
Pair Corralation between Transport International and Uber Technologies
Assuming the 90 days horizon Transport International Holdings is expected to generate 2.19 times more return on investment than Uber Technologies. However, Transport International is 2.19 times more volatile than Uber Technologies. It trades about 0.07 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.0 per unit of risk. If you would invest 55.00 in Transport International Holdings on October 14, 2024 and sell it today you would earn a total of 41.00 from holding Transport International Holdings or generate 74.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Uber Technologies
Performance |
| Timeline |
| Transport International |
| Uber Technologies |
Transport International and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Uber Technologies
The main advantage of trading using opposite Transport International and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.The idea behind Transport International Holdings and Uber Technologies 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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