Correlation Between Uipath and Affirm Holdings
Can any of the company-specific risk be diversified away by investing in both Uipath and Affirm Holdings 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 Uipath and Affirm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uipath Inc and Affirm Holdings, you can compare the effects of market volatilities on Uipath and Affirm Holdings 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 Uipath with a short position of Affirm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uipath and Affirm Holdings.
Diversification Opportunities for Uipath and Affirm Holdings
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Uipath and Affirm is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Uipath Inc and Affirm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affirm Holdings and Uipath 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 Uipath Inc are associated (or correlated) with Affirm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affirm Holdings has no effect on the direction of Uipath i.e., Uipath and Affirm Holdings go up and down completely randomly.
Pair Corralation between Uipath and Affirm Holdings
Given the investment horizon of 90 days Uipath Inc is expected to generate 0.69 times more return on investment than Affirm Holdings. However, Uipath Inc is 1.45 times less risky than Affirm Holdings. It trades about 0.06 of its potential returns per unit of risk. Affirm Holdings is currently generating about -0.2 per unit of risk. If you would invest 1,305 in Uipath Inc on October 23, 2024 and sell it today you would earn a total of 28.00 from holding Uipath Inc or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uipath Inc vs. Affirm Holdings
Performance |
| Timeline |
| Uipath Inc |
| Affirm Holdings |
Uipath and Affirm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uipath and Affirm Holdings
The main advantage of trading using opposite Uipath and Affirm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uipath position performs unexpectedly, Affirm Holdings 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 Affirm Holdings will offset losses from the drop in Affirm Holdings' long position.The idea behind Uipath Inc and Affirm Holdings 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.| Affirm Holdings vs. Upstart Holdings | Affirm Holdings vs. SoFi Technologies | Affirm Holdings vs. Roblox Corp | Affirm Holdings vs. Robinhood Markets |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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