Correlation Between PTC and Unity Software

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

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

Diversification Opportunities for PTC and Unity Software

0.54

Correlation Coefficient

PTC  Unity Software

Very weak diversification

The 3 months correlation between PTC and Unity is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding PTC Inc and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software and PTC 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 PTC Inc are associated (or correlated) with Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of PTC i.e., PTC and Unity Software go up and down completely randomly.

Pair Corralation between PTC and Unity Software

Considering the 90-day investment horizon PTC Inc is expected to generate 0.51 times more return on investment than Unity Software. However, PTC Inc is 1.97 times less risky than Unity Software. It trades about -0.07 of its potential returns per unit of risk. Unity Software is currently generating about -0.23 per unit of risk. If you would invest  18,722  in PTC Inc on March 4, 2024 and sell it today you would lose (1,098) from holding PTC Inc or give up 5.86% of portfolio value over 90 days.

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

PTC Inc  vs.  Unity Software

PTC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PTC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Unity Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unity Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PTC and Unity Software

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

The idea behind PTC Inc and Unity Software 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.