Correlation Between Ubiquiti Networks and MITIE GROUP

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Can any of the company-specific risk be diversified away by investing in both Ubiquiti Networks and MITIE 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 Ubiquiti Networks and MITIE GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ubiquiti Networks and MITIE GROUP PLC, you can compare the effects of market volatilities on Ubiquiti Networks and MITIE 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 Ubiquiti Networks with a short position of MITIE GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ubiquiti Networks and MITIE GROUP.

Diversification Opportunities for Ubiquiti Networks and MITIE GROUP

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ubiquiti and MITIE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and MITIE GROUP PLC ORD 2 5P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITIE GROUP PLC and Ubiquiti Networks 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 Ubiquiti Networks are associated (or correlated) with MITIE GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITIE GROUP PLC has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and MITIE GROUP go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and MITIE GROUP

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 1.29 times less return on investment than MITIE GROUP. In addition to that, Ubiquiti Networks is 1.12 times more volatile than MITIE GROUP PLC. It trades about 0.05 of its total potential returns per unit of risk. MITIE GROUP PLC is currently generating about 0.07 per unit of volatility. If you would invest  3,102  in MITIE GROUP PLC on July 5, 2022 and sell it today you would earn a total of  3,158  from holding MITIE GROUP PLC or generate 101.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

Ubiquiti Networks  vs.  MITIE GROUP PLC ORD 2 5P

 Performance (%) 
       Timeline  
Ubiquiti Networks 
Ubiquiti Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquiti Networks are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward indicators, Ubiquiti Networks reported solid returns over the last few months and may actually be approaching a breakup point.

Ubiquiti Price Channel

MITIE GROUP PLC 
MITIE Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in MITIE GROUP PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, MITIE GROUP revealed solid returns over the last few months and may actually be approaching a breakup point.

MITIE Price Channel

Ubiquiti Networks and MITIE GROUP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ubiquiti Networks and MITIE GROUP

The main advantage of trading using opposite Ubiquiti Networks and MITIE GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubiquiti Networks position performs unexpectedly, MITIE 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 MITIE GROUP will offset losses from the drop in MITIE GROUP's long position.
Ubiquiti Networks vs. Amazon Inc
The idea behind Ubiquiti Networks and MITIE GROUP PLC 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.
MITIE GROUP vs. GLAXOSMITHKLINE PLC ORD
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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