Correlation Between Unisys and Leidos Holdings
Can any of the company-specific risk be diversified away by investing in both Unisys and Leidos Holdings 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 Unisys and Leidos Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unisys and Leidos Holdings, you can compare the effects of market volatilities on Unisys and Leidos Holdings 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 Unisys with a short position of Leidos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unisys and Leidos Holdings.
Diversification Opportunities for Unisys and Leidos Holdings
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unisys and Leidos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Unisys and Leidos Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leidos Holdings and Unisys 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 Unisys are associated (or correlated) with Leidos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leidos Holdings has no effect on the direction of Unisys i.e., Unisys and Leidos Holdings go up and down completely randomly.
Pair Corralation between Unisys and Leidos Holdings
Considering the 90-day investment horizon Unisys is expected to generate 2.23 times more return on investment than Leidos Holdings. However, Unisys is 2.23 times more volatile than Leidos Holdings. It trades about 0.27 of its potential returns per unit of risk. Leidos Holdings is currently generating about -0.14 per unit of risk. If you would invest 538.00 in Unisys on August 30, 2024 and sell it today you would earn a total of 274.00 from holding Unisys or generate 50.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unisys vs. Leidos Holdings
Performance |
| Timeline |
| Unisys |
| Leidos Holdings |
Unisys and Leidos Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unisys and Leidos Holdings
The main advantage of trading using opposite Unisys and Leidos Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unisys position performs unexpectedly, Leidos Holdings 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 Leidos Holdings will offset losses from the drop in Leidos Holdings' long position.The idea behind Unisys and Leidos Holdings 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.| Leidos Holdings vs. CACI International | Leidos Holdings vs. Parsons Corp | Leidos Holdings vs. ASGN Inc | Leidos Holdings vs. ExlService Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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