Correlation Between Unifirst and Mader Group

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

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

Diversification Opportunities for Unifirst and Mader Group

-0.17

Correlation Coefficient

Unifirst  Mader Group

Good diversification

The 3 months correlation between Unifirst and Mader is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Unifirst and Mader Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mader Group Limited and Unifirst 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 Unifirst are associated (or correlated) with Mader Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mader Group Limited has no effect on the direction of Unifirst i.e., Unifirst and Mader Group go up and down completely randomly.

Pair Corralation between Unifirst and Mader Group

Considering the 90-day investment horizon Unifirst is expected to generate 0.83 times more return on investment than Mader Group. However, Unifirst is 1.2 times less risky than Mader Group. It trades about 0.08 of its potential returns per unit of risk. Mader Group Limited is currently generating about -0.05 per unit of risk. If you would invest  18,551  in Unifirst on September 4, 2024 and sell it today you would earn a total of  1,566  from holding Unifirst or generate 8.44% return on investment over 90 days.

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

Unifirst  vs.  Mader Group Limited

Unifirst

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unifirst are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Unifirst may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mader Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mader Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Unifirst and Mader Group

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

The idea behind Unifirst and Mader Group Limited 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.