Correlation Between United Guardian and Dingdong ADR
Can any of the company-specific risk be diversified away by investing in both United Guardian and Dingdong ADR 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 United Guardian and Dingdong ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and Dingdong ADR, you can compare the effects of market volatilities on United Guardian and Dingdong ADR 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 United Guardian with a short position of Dingdong ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Dingdong ADR.
Diversification Opportunities for United Guardian and Dingdong ADR
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Dingdong is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and Dingdong ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dingdong ADR and United Guardian 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 United Guardian are associated (or correlated) with Dingdong ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dingdong ADR has no effect on the direction of United Guardian i.e., United Guardian and Dingdong ADR go up and down completely randomly.
Pair Corralation between United Guardian and Dingdong ADR
Allowing for the 90-day total investment horizon United Guardian is expected to generate 0.79 times more return on investment than Dingdong ADR. However, United Guardian is 1.27 times less risky than Dingdong ADR. It trades about 0.13 of its potential returns per unit of risk. Dingdong ADR is currently generating about 0.07 per unit of risk. If you would invest 1,039 in United Guardian on November 18, 2024 and sell it today you would earn a total of 49.00 from holding United Guardian or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Guardian vs. Dingdong ADR
Performance |
| Timeline |
| United Guardian |
| Dingdong ADR |
United Guardian and Dingdong ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Guardian and Dingdong ADR
The main advantage of trading using opposite United Guardian and Dingdong ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian position performs unexpectedly, Dingdong ADR 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 Dingdong ADR will offset losses from the drop in Dingdong ADR's long position.| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Unity Bancorp |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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