Correlation Between Uber Technologies and First American

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Can any of the company-specific risk be diversified away by investing in both Uber Technologies and First American 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 Uber Technologies and First American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and First American Financial, you can compare the effects of market volatilities on Uber Technologies and First American 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 Uber Technologies with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and First American.

Diversification Opportunities for Uber Technologies and First American

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Uber and First is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and First American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Financial and Uber Technologies 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 Uber Technologies are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Financial has no effect on the direction of Uber Technologies i.e., Uber Technologies and First American go up and down completely randomly.

Pair Corralation between Uber Technologies and First American

Assuming the 90 days trading horizon Uber Technologies is expected to generate 1.59 times more return on investment than First American. However, Uber Technologies is 1.59 times more volatile than First American Financial. It trades about 0.09 of its potential returns per unit of risk. First American Financial is currently generating about 0.05 per unit of risk. If you would invest  2,316  in Uber Technologies on September 14, 2024 and sell it today you would earn a total of  3,603  from holding Uber Technologies or generate 155.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Uber Technologies  vs.  First American Financial

 Performance 
       Timeline  
Uber Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
First American Financial 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in First American Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, First American may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Uber Technologies and First American Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Uber Technologies and First American

The main advantage of trading using opposite Uber Technologies and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.
The idea behind Uber Technologies and First American Financial 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.
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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