Correlation Between Unisys and NetApp

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

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

Diversification Opportunities for Unisys and NetApp

-0.7

Correlation Coefficient

Unisys  NetApp

Excellent diversification

The 3 months correlation between Unisys and NetApp is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Unisys and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and Unisys 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 Unisys are associated (or correlated) with NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Unisys i.e., Unisys and NetApp go up and down completely randomly.

Pair Corralation between Unisys and NetApp

Considering the 90-day investment horizon Unisys is expected to generate 2.13 times more return on investment than NetApp. However, Unisys is 2.13 times more volatile than NetApp Inc. It trades about 0.2 of its potential returns per unit of risk. NetApp Inc is currently generating about -0.17 per unit of risk. If you would invest  498.00  in Unisys on January 26, 2024 and sell it today you would earn a total of  56.00  from holding Unisys or generate 11.24% return on investment over 90 days.

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

Unisys  vs.  NetApp Inc

Unisys

Risk-Adjusted Performance

0 of 100

Very Weak

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

NetApp Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, NetApp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unisys and NetApp

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

The idea behind Unisys and NetApp Inc 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.