Correlation Between Under Armour and Charles Colvard

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

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

Diversification Opportunities for Under Armour and Charles Colvard

-0.44

Correlation Coefficient

Under Armour  Charles Colvard

Very good diversification

The 3 months correlation between Under and Charles is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Charles Colvard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Colvard and Under Armour 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 Under Armour C are associated (or correlated) with Charles Colvard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Colvard has no effect on the direction of Under Armour i.e., Under Armour and Charles Colvard go up and down completely randomly.

Pair Corralation between Under Armour and Charles Colvard

Allowing for the 90-day total investment horizon Under Armour C is expected to under-perform the Charles Colvard. But the stock apears to be less risky and, when comparing its historical volatility, Under Armour C is 3.04 times less risky than Charles Colvard. The stock trades about -0.18 of its potential returns per unit of risk. The Charles Colvard is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Charles Colvard on September 23, 2024 and sell it today you would earn a total of  14.00  from holding Charles Colvard or generate 10.69% return on investment over 90 days.

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

Under Armour C  vs.  Charles Colvard

Under Armour C

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour C are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Under Armour may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Charles Colvard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charles Colvard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Charles Colvard is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Under Armour and Charles Colvard

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

The idea behind Under Armour C and Charles Colvard 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.