Correlation Between Uniti and Newlake Capital

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

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

Diversification Opportunities for Uniti and Newlake Capital

-0.33

Correlation Coefficient

Uniti  Newlake Capital

Very good diversification

The 3 months correlation between Uniti and Newlake is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Uniti Group and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners and Uniti 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 Uniti Group are associated (or correlated) with Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of Uniti i.e., Uniti and Newlake Capital go up and down completely randomly.

Pair Corralation between Uniti and Newlake Capital

Given the investment horizon of 90 days Uniti Group is expected to generate 1.61 times more return on investment than Newlake Capital. However, Uniti is 1.61 times more volatile than Newlake Capital Partners. It trades about 0.26 of its potential returns per unit of risk. Newlake Capital Partners is currently generating about -0.03 per unit of risk. If you would invest  507.00  in Uniti Group on September 1, 2024 and sell it today you would earn a total of  84.00  from holding Uniti Group or generate 16.57% return on investment over 90 days.

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

Uniti Group  vs.  Newlake Capital Partners

Uniti Group

Risk-Adjusted Performance

12 of 100

Good

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

Newlake Capital Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newlake Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Newlake Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Uniti and Newlake Capital

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

The idea behind Uniti Group and Newlake Capital Partners 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.