Correlation Between Unity Software and National Grid
Can any of the company-specific risk be diversified away by investing in both Unity Software and National Grid 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 Unity Software and National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Software and National Grid plc, you can compare the effects of market volatilities on Unity Software and National Grid 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 Unity Software with a short position of National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Software and National Grid.
Diversification Opportunities for Unity Software and National Grid
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Unity and National is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and National Grid plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid plc and Unity Software 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 Unity Software are associated (or correlated) with National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid plc has no effect on the direction of Unity Software i.e., Unity Software and National Grid go up and down completely randomly.
Pair Corralation between Unity Software and National Grid
Taking into account the 90-day investment horizon Unity Software is expected to under-perform the National Grid. In addition to that, Unity Software is 1.95 times more volatile than National Grid plc. It trades about -0.01 of its total potential returns per unit of risk. National Grid plc is currently generating about 0.03 per unit of volatility. If you would invest 5,224 in National Grid plc on September 4, 2024 and sell it today you would earn a total of 676.00 from holding National Grid plc or generate 12.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.9% |
| Values | Daily Returns |
Unity Software vs. National Grid plc
Performance |
| Timeline |
| Unity Software |
| National Grid plc |
Unity Software and National Grid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unity Software and National Grid
The main advantage of trading using opposite Unity Software and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Software position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid's long position.| Unity Software vs. Zoom Video Communications | Unity Software vs. C3 Ai Inc | Unity Software vs. Shopify | Unity Software vs. Salesforce |
| National Grid vs. Lion Biotechnologies | National Grid vs. Amkor Technology | National Grid vs. SEI INVESTMENTS | National Grid vs. NetSol Technologies |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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