Correlation Between SEALED AIR and Unity Software
Can any of the company-specific risk be diversified away by investing in both SEALED AIR 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 SEALED AIR and Unity Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and Unity Software, you can compare the effects of market volatilities on SEALED AIR 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 SEALED AIR with a short position of Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Unity Software.
Diversification Opportunities for SEALED AIR and Unity Software
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEALED and Unity is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software and SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and Unity Software go up and down completely randomly.
Pair Corralation between SEALED AIR and Unity Software
Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.46 times more return on investment than Unity Software. However, SEALED AIR is 2.18 times less risky than Unity Software. It trades about 0.08 of its potential returns per unit of risk. Unity Software is currently generating about 0.04 per unit of risk. If you would invest 3,160 in SEALED AIR on August 25, 2024 and sell it today you would earn a total of 200.00 from holding SEALED AIR or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. Unity Software
Performance |
| Timeline |
| SEALED AIR |
| Unity Software |
SEALED AIR and Unity Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Unity Software
The main advantage of trading using opposite SEALED AIR and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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.The idea behind SEALED AIR and Unity Software 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.| Unity Software vs. Apple Inc | Unity Software vs. Apple Inc | Unity Software vs. Apple Inc | Unity Software vs. Apple Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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