Correlation Between Fathom Digital and Ubiquiti Networks

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

Diversification Opportunities for Fathom Digital and Ubiquiti Networks

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fathom and Ubiquiti is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fathom Digital Manufacturing and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks and Fathom Digital 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 Fathom Digital Manufacturing are associated (or correlated) with Ubiquiti Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubiquiti Networks has no effect on the direction of Fathom Digital i.e., Fathom Digital and Ubiquiti Networks go up and down completely randomly.

Pair Corralation between Fathom Digital and Ubiquiti Networks

Given the investment horizon of 90 days Fathom Digital Manufacturing is expected to under-perform the Ubiquiti Networks. In addition to that, Fathom Digital is 2.31 times more volatile than Ubiquiti Networks. It trades about -0.08 of its total potential returns per unit of risk. Ubiquiti Networks is currently generating about -0.06 per unit of volatility. If you would invest  28,388  in Ubiquiti Networks on January 14, 2024 and sell it today you would lose (17,560) from holding Ubiquiti Networks or give up 61.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fathom Digital Manufacturing  vs.  Ubiquiti Networks

 Performance 
       Timeline  
Fathom Digital Manuf 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Fathom Digital Manufacturing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Fathom Digital is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
Ubiquiti Networks 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ubiquiti Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Fathom Digital and Ubiquiti Networks Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fathom Digital and Ubiquiti Networks

The main advantage of trading using opposite Fathom Digital and Ubiquiti Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fathom Digital position performs unexpectedly, Ubiquiti Networks 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 Ubiquiti Networks will offset losses from the drop in Ubiquiti Networks' long position.
The idea behind Fathom Digital Manufacturing and Ubiquiti Networks 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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