Correlation Between Twitter and Uber Technologies

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

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

Diversification Opportunities for Twitter and Uber Technologies

0.67
  Correlation Coefficient
Twitter
Uber Technologies

Poor diversification

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

Pair Corralation between Twitter and Uber Technologies

Given the investment horizon of 90 days Twitter is expected to under-perform the Uber Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Twitter is 1.16 times less risky than Uber Technologies. The stock trades about -0.24 of its potential returns per unit of risk. The Uber Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,968  in Uber Technologies on October 18, 2021 and sell it today you would earn a total of  183.00  from holding Uber Technologies or generate 4.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Twitter  vs.  Uber Technologies

 Performance (%) 
      Timeline 
Twitter 
Twitter Performance
0 of 100
Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Twitter Price Channel

Uber Technologies 
Uber Technologies Performance
0 of 100
Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Uber Technologies Price Channel

Twitter and Uber Technologies Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Twitter and Uber Technologies

The main advantage of trading using opposite Twitter and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twitter position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.
The idea behind Twitter and Uber Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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