Correlation Between UNIQA Insurance and Dollar Tree

Can any of the company-specific risk be diversified away by investing in both UNIQA Insurance and Dollar Tree 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 UNIQA Insurance and Dollar Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNIQA Insurance Group and Dollar Tree, you can compare the effects of market volatilities on UNIQA Insurance and Dollar Tree 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 UNIQA Insurance with a short position of Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIQA Insurance and Dollar Tree.

Diversification Opportunities for UNIQA Insurance and Dollar Tree

0.56

Correlation Coefficient

UNIQA Insurance  Dollar Tree

Very weak diversification

The 3 months correlation between UNIQA and Dollar is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and UNIQA Insurance 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 UNIQA Insurance Group are associated (or correlated) with Dollar Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar Tree has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and Dollar Tree go up and down completely randomly.

Pair Corralation between UNIQA Insurance and Dollar Tree

Assuming the 90 days trading horizon UNIQA Insurance Group is expected to generate 0.19 times more return on investment than Dollar Tree. However, UNIQA Insurance Group is 5.24 times less risky than Dollar Tree. It trades about -0.12 of its potential returns per unit of risk. Dollar Tree is currently generating about -0.03 per unit of risk. If you would invest  768.00  in UNIQA Insurance Group on September 3, 2024 and sell it today you would lose (49.00) from holding UNIQA Insurance Group or give up 6.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

UNIQA Insurance Group  vs.  Dollar Tree

UNIQA Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIQA Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, UNIQA Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dollar Tree

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dollar Tree 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.

Pair Trading with UNIQA Insurance and Dollar Tree

The main advantage of trading using opposite UNIQA Insurance and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIQA Insurance position performs unexpectedly, Dollar Tree 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 Dollar Tree will offset losses from the drop in Dollar Tree's long position.

The idea behind UNIQA Insurance Group and Dollar Tree 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.