Correlation Between UDR and Saputo
Can any of the company-specific risk be diversified away by investing in both UDR and Saputo 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 UDR and Saputo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UDR Inc and Saputo Inc, you can compare the effects of market volatilities on UDR and Saputo 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 UDR with a short position of Saputo. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and Saputo.
Diversification Opportunities for UDR and Saputo
Poor diversification
The 3 months correlation between UDR and Saputo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and Saputo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saputo Inc and UDR 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 UDR Inc are associated (or correlated) with Saputo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saputo Inc has no effect on the direction of UDR i.e., UDR and Saputo go up and down completely randomly.
Pair Corralation between UDR and Saputo
Assuming the 90 days horizon UDR is expected to generate 1.59 times less return on investment than Saputo. But when comparing it to its historical volatility, UDR Inc is 1.86 times less risky than Saputo. It trades about 0.27 of its potential returns per unit of risk. Saputo Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,585 in Saputo Inc on November 28, 2024 and sell it today you would earn a total of 138.00 from holding Saputo Inc or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
UDR Inc vs. Saputo Inc
Performance |
| Timeline |
| UDR Inc |
| Saputo Inc |
UDR and Saputo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UDR and Saputo
The main advantage of trading using opposite UDR and Saputo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UDR position performs unexpectedly, Saputo 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 Saputo will offset losses from the drop in Saputo's long position.The idea behind UDR Inc and Saputo Inc 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.| Saputo vs. Tradeweb Markets | Saputo vs. CANON MARKETING JP | Saputo vs. Allegheny Technologies Incorporated | Saputo vs. Easy Software AG |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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