Correlation Between Unity Software and Ponce Financial

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

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

Diversification Opportunities for Unity Software and Ponce Financial

0.53

Correlation Coefficient

Unity Software  Ponce Financial

Very weak diversification

The 3 months correlation between Unity and Ponce is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Ponce Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ponce Financial Group 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 Ponce Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ponce Financial Group has no effect on the direction of Unity Software i.e., Unity Software and Ponce Financial go up and down completely randomly.

Pair Corralation between Unity Software and Ponce Financial

Taking into account the 90-day investment horizon Unity Software is expected to generate 2.06 times more return on investment than Ponce Financial. However, Unity Software is 2.06 times more volatile than Ponce Financial Group. It trades about 0.14 of its potential returns per unit of risk. Ponce Financial Group is currently generating about 0.15 per unit of risk. If you would invest  1,991  in Unity Software on September 13, 2024 and sell it today you would earn a total of  664.00  from holding Unity Software or generate 33.35% 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.  Ponce Financial Group

Unity Software

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 11 (%) 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.

Ponce Financial Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ponce Financial Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile essential indicators, Ponce Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and Ponce Financial

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

The idea behind Unity Software and Ponce Financial Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.