Correlation Between Phunware and Unity Software

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

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

Diversification Opportunities for Phunware and Unity Software

0.1

Correlation Coefficient

Phunware  Unity Software

Average diversification

The 3 months correlation between Phunware and Unity is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Phunware and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software and Phunware 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 Phunware are associated (or correlated) with Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of Phunware i.e., Phunware and Unity Software go up and down completely randomly.

Pair Corralation between Phunware and Unity Software

Given the investment horizon of 90 days Phunware is expected to generate 2.87 times more return on investment than Unity Software. However, Phunware is 2.87 times more volatile than Unity Software. It trades about 0.1 of its potential returns per unit of risk. Unity Software is currently generating about 0.16 per unit of risk. If you would invest  328.00  in Phunware on September 5, 2024 and sell it today you would earn a total of  107.00  from holding Phunware or generate 32.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Phunware  vs.  Unity Software

Phunware

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phunware are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Phunware displayed solid returns over the last few months and may actually be approaching a breakup point.

Unity Software

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Unity Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phunware and Unity Software

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

The idea behind Phunware and Unity Software 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.