Correlation Between Under Armour and EZGO Technologies

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

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

Diversification Opportunities for Under Armour and EZGO Technologies

-0.66

Correlation Coefficient

Under Armour  EZGO Technologies

Excellent diversification

The 3 months correlation between Under and EZGO is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and EZGO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZGO Technologies and Under Armour 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 Under Armour C are associated (or correlated) with EZGO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZGO Technologies has no effect on the direction of Under Armour i.e., Under Armour and EZGO Technologies go up and down completely randomly.

Pair Corralation between Under Armour and EZGO Technologies

Allowing for the 90-day total investment horizon Under Armour C is expected to generate 1.58 times more return on investment than EZGO Technologies. However, Under Armour is 1.58 times more volatile than EZGO Technologies. It trades about 0.09 of its potential returns per unit of risk. EZGO Technologies is currently generating about -0.2 per unit of risk. If you would invest  805.00  in Under Armour C on August 30, 2024 and sell it today you would earn a total of  72.00  from holding Under Armour C or generate 8.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Under Armour C  vs.  EZGO Technologies

Under Armour C

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour C are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Under Armour sustained solid returns over the last few months and may actually be approaching a breakup point.

EZGO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZGO Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Under Armour and EZGO Technologies

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

The idea behind Under Armour C and EZGO Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.