Correlation Between Unity Software and DoubleVerify Holdings

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

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

Diversification Opportunities for Unity Software and DoubleVerify Holdings

0.48

Correlation Coefficient

Unity Software  DoubleVerify Holdings

Very weak diversification

The 3 months correlation between Unity and DoubleVerify is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and DoubleVerify Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoubleVerify Holdings 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 DoubleVerify Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoubleVerify Holdings has no effect on the direction of Unity Software i.e., Unity Software and DoubleVerify Holdings go up and down completely randomly.

Pair Corralation between Unity Software and DoubleVerify Holdings

Taking into account the 90-day investment horizon Unity Software is expected to generate 1.48 times less return on investment than DoubleVerify Holdings. In addition to that, Unity Software is 1.87 times more volatile than DoubleVerify Holdings. It trades about 0.05 of its total potential returns per unit of risk. DoubleVerify Holdings is currently generating about 0.13 per unit of volatility. If you would invest  1,684  in DoubleVerify Holdings on September 29, 2024 and sell it today you would earn a total of  279.00  from holding DoubleVerify Holdings or generate 16.57% return on investment over 90 days.

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

Unity Software  vs.  DoubleVerify Holdings

Unity Software

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Unity Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DoubleVerify Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DoubleVerify Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, DoubleVerify Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and DoubleVerify Holdings

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

The idea behind Unity Software and DoubleVerify Holdings 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.