Correlation Between Ultralife Corp and Teucrium Corn

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

Diversification Opportunities for Ultralife Corp and Teucrium Corn

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ultralife and Teucrium is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ultralife Corp and Teucrium Corn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Corn and Ultralife Corp 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 Ultralife Corp are associated (or correlated) with Teucrium Corn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Corn has no effect on the direction of Ultralife Corp i.e., Ultralife Corp and Teucrium Corn go up and down completely randomly.

Pair Corralation between Ultralife Corp and Teucrium Corn

Given the investment horizon of 90 days Ultralife Corp is expected to under-perform the Teucrium Corn. In addition to that, Ultralife Corp is 1.73 times more volatile than Teucrium Corn. It trades about -0.05 of its total potential returns per unit of risk. Teucrium Corn is currently generating about 0.08 per unit of volatility. If you would invest  2,051  in Teucrium Corn on June 28, 2022 and sell it today you would earn a total of  615.00  from holding Teucrium Corn or generate 29.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ultralife Corp  vs.  Teucrium Corn

 Performance (%) 
       Timeline  
Ultralife Corp 
Ultralife Performance
0 of 100
Over the last 90 days Ultralife Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Ultralife Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ultralife Price Channel

Teucrium Corn 
Teucrium Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Teucrium Corn are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Teucrium Corn is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Teucrium Price Channel

Ultralife Corp and Teucrium Corn Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ultralife Corp and Teucrium Corn

The main advantage of trading using opposite Ultralife Corp and Teucrium Corn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultralife Corp position performs unexpectedly, Teucrium Corn 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 Teucrium Corn will offset losses from the drop in Teucrium Corn's long position.
Ultralife Corp vs. Sunrun Inc
The idea behind Ultralife Corp and Teucrium Corn 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.
Teucrium Corn vs. SP 500 SPDR
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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