Correlation Between Uber Technologies and Workday

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

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

Diversification Opportunities for Uber Technologies and Workday

-0.67

Correlation Coefficient

Uber Technologies  Workday

Excellent diversification

The 3 months correlation between Uber and Workday is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Workday in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workday and Uber Technologies 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 Uber Technologies are associated (or correlated) with Workday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workday has no effect on the direction of Uber Technologies i.e., Uber Technologies and Workday go up and down completely randomly.

Pair Corralation between Uber Technologies and Workday

Assuming the 90 days horizon Uber Technologies is expected to under-perform the Workday. In addition to that, Uber Technologies is 1.28 times more volatile than Workday. It trades about -0.01 of its total potential returns per unit of risk. Workday is currently generating about 0.08 per unit of volatility. If you would invest  20,700  in Workday on September 27, 2024 and sell it today you would earn a total of  4,645  from holding Workday or generate 22.44% return on investment over 90 days.

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

Uber Technologies  vs.  Workday

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Workday

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Workday reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uber Technologies and Workday

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

The idea behind Uber Technologies and Workday 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.