Correlation Between Universal Entertainment and HomeToGo
Can any of the company-specific risk be diversified away by investing in both Universal Entertainment and HomeToGo 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 Universal Entertainment and HomeToGo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and HomeToGo SE, you can compare the effects of market volatilities on Universal Entertainment and HomeToGo 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 Universal Entertainment with a short position of HomeToGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and HomeToGo.
Diversification Opportunities for Universal Entertainment and HomeToGo
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and HomeToGo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE and Universal Entertainment 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 Universal Entertainment are associated (or correlated) with HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Universal Entertainment i.e., Universal Entertainment and HomeToGo go up and down completely randomly.
Pair Corralation between Universal Entertainment and HomeToGo
Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the HomeToGo. In addition to that, Universal Entertainment is 1.82 times more volatile than HomeToGo SE. It trades about -0.09 of its total potential returns per unit of risk. HomeToGo SE is currently generating about -0.13 per unit of volatility. If you would invest 230.00 in HomeToGo SE on August 29, 2024 and sell it today you would lose (20.00) from holding HomeToGo SE or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Entertainment vs. HomeToGo SE
Performance |
| Timeline |
| Universal Entertainment |
| HomeToGo SE |
Universal Entertainment and HomeToGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Entertainment and HomeToGo
The main advantage of trading using opposite Universal Entertainment and HomeToGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment position performs unexpectedly, HomeToGo 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 HomeToGo will offset losses from the drop in HomeToGo's long position.| Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Microsoft | Universal Entertainment vs. Microsoft |
| HomeToGo vs. Ryanair Holdings plc | HomeToGo vs. SYSTEMAIR AB | HomeToGo vs. Harmony Gold Mining | HomeToGo vs. Westinghouse Air Brake |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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