Correlation Between Unum and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Unum and Cebu Air 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 Unum and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unum Group and Cebu Air ADR, you can compare the effects of market volatilities on Unum and Cebu Air 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 Unum with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unum and Cebu Air.
Diversification Opportunities for Unum and Cebu Air
Modest diversification
The 3 months correlation between Unum and Cebu is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Unum Group and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR and Unum 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 Unum Group are associated (or correlated) with Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of Unum i.e., Unum and Cebu Air go up and down completely randomly.
Pair Corralation between Unum and Cebu Air
If you would invest 2,467 in Unum Group on September 12, 2024 and sell it today you would earn a total of 39.00 from holding Unum Group or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unum Group vs. Cebu Air ADR
Performance |
| Timeline |
| Unum Group |
| Cebu Air ADR |
Unum and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unum and Cebu Air
The main advantage of trading using opposite Unum and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unum position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.| Unum vs. Suburban Propane Partners | Unum vs. Sun Country Airlines | Unum vs. Afya | Unum vs. Yuexiu Transport Infrastructure |
| Cebu Air vs. Finnair Oyj | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air New Zealand |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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