Correlation Between Unity Software and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both Unity Software and Carpenter Technology 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 Carpenter Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Software and Carpenter Technology, you can compare the effects of market volatilities on Unity Software and Carpenter Technology 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 Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Software and Carpenter Technology.
Diversification Opportunities for Unity Software and Carpenter Technology
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unity and Carpenter is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology 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 Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of Unity Software i.e., Unity Software and Carpenter Technology go up and down completely randomly.
Pair Corralation between Unity Software and Carpenter Technology
Assuming the 90 days horizon Unity Software is expected to under-perform the Carpenter Technology. In addition to that, Unity Software is 1.33 times more volatile than Carpenter Technology. It trades about -0.01 of its total potential returns per unit of risk. Carpenter Technology is currently generating about 0.12 per unit of volatility. If you would invest 4,584 in Carpenter Technology on September 1, 2024 and sell it today you would earn a total of 13,716 from holding Carpenter Technology or generate 299.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Unity Software vs. Carpenter Technology
Performance |
| Timeline |
| Unity Software |
| Carpenter Technology |
Unity Software and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unity Software and Carpenter Technology
The main advantage of trading using opposite Unity Software and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Software position performs unexpectedly, Carpenter Technology 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 Carpenter Technology will offset losses from the drop in Carpenter Technology's long position.| Unity Software vs. MI Homes | Unity Software vs. bet at home AG | Unity Software vs. Autohome ADR | Unity Software vs. Perseus Mining Limited |
| Carpenter Technology vs. Playtech plc | Carpenter Technology vs. THORNEY TECHS LTD | Carpenter Technology vs. SIEM OFFSHORE NEW | Carpenter Technology vs. ACCSYS TECHPLC EO |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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