Correlation Between Tesco PLC and UNIQA Insurance
Can any of the company-specific risk be diversified away by investing in both Tesco PLC and UNIQA Insurance 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 Tesco PLC and UNIQA Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesco PLC and UNIQA Insurance Group, you can compare the effects of market volatilities on Tesco PLC and UNIQA Insurance 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 Tesco PLC with a short position of UNIQA Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesco PLC and UNIQA Insurance.
Diversification Opportunities for Tesco PLC and UNIQA Insurance
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tesco and UNIQA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tesco PLC and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group and Tesco PLC 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 Tesco PLC are associated (or correlated) with UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of Tesco PLC i.e., Tesco PLC and UNIQA Insurance go up and down completely randomly.
Pair Corralation between Tesco PLC and UNIQA Insurance
Assuming the 90 days trading horizon Tesco PLC is expected to generate 1.08 times more return on investment than UNIQA Insurance. However, Tesco PLC is 1.08 times more volatile than UNIQA Insurance Group. It trades about 0.19 of its potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.03 per unit of risk. If you would invest 35,180 in Tesco PLC on September 3, 2024 and sell it today you would earn a total of 1,460 from holding Tesco PLC or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesco PLC vs. UNIQA Insurance Group
Performance |
| Timeline |
| Tesco PLC |
| UNIQA Insurance Group |
Tesco PLC and UNIQA Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesco PLC and UNIQA Insurance
The main advantage of trading using opposite Tesco PLC and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesco PLC position performs unexpectedly, UNIQA Insurance 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 UNIQA Insurance will offset losses from the drop in UNIQA Insurance's long position.| Tesco PLC vs. UNIQA Insurance Group | Tesco PLC vs. Veolia Environnement VE | Tesco PLC vs. National Bank of | Tesco PLC vs. Lendinvest PLC |
| UNIQA Insurance vs. Panther Metals PLC | UNIQA Insurance vs. McEwen Mining | UNIQA Insurance vs. Molson Coors Beverage | UNIQA Insurance vs. Central Asia Metals |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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