Correlation Between Unity Software and Bread Financial
Can any of the company-specific risk be diversified away by investing in both Unity Software and Bread Financial 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 Bread Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Software and Bread Financial Holdings, you can compare the effects of market volatilities on Unity Software and Bread Financial 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 Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Software and Bread Financial.
Diversification Opportunities for Unity Software and Bread Financial
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Unity and Bread is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings 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 Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of Unity Software i.e., Unity Software and Bread Financial go up and down completely randomly.
Pair Corralation between Unity Software and Bread Financial
Assuming the 90 days trading horizon Unity Software is expected to generate 3.47 times less return on investment than Bread Financial. In addition to that, Unity Software is 1.32 times more volatile than Bread Financial Holdings. It trades about 0.01 of its total potential returns per unit of risk. Bread Financial Holdings is currently generating about 0.05 per unit of volatility. If you would invest 5,005 in Bread Financial Holdings on September 3, 2024 and sell it today you would earn a total of 3,881 from holding Bread Financial Holdings or generate 77.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.6% |
| Values | Daily Returns |
Unity Software vs. Bread Financial Holdings
Performance |
| Timeline |
| Unity Software |
| Bread Financial Holdings |
Unity Software and Bread Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unity Software and Bread Financial
The main advantage of trading using opposite Unity Software and Bread Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Software position performs unexpectedly, Bread Financial 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 Bread Financial will offset losses from the drop in Bread Financial's long position.| Unity Software vs. United States Steel | Unity Software vs. Agilent Technologies | Unity Software vs. Unifique Telecomunicaes SA | Unity Software vs. Palantir Technologies |
| Bread Financial vs. Visa Inc | Bread Financial vs. Capital One Financial | Bread Financial vs. Credit Acceptance |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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