Correlation Between Uber Technologies and Nextera Energy

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

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

Diversification Opportunities for Uber Technologies and Nextera Energy

0.36

Correlation Coefficient

Uber Technologies  Nextera Energy

Weak diversification

The 3 months correlation between Uber and Nextera is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Nextera Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy Partners and Uber Technologies 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 Uber Technologies are associated (or correlated) with Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy Partners has no effect on the direction of Uber Technologies i.e., Uber Technologies and Nextera Energy go up and down completely randomly.

Pair Corralation between Uber Technologies and Nextera Energy

Given the investment horizon of 90 days Uber Technologies is expected to generate 1.28 times more return on investment than Nextera Energy. However, Uber Technologies is 1.28 times more volatile than Nextera Energy Partners. It trades about 0.13 of its potential returns per unit of risk. Nextera Energy Partners is currently generating about 0.03 per unit of risk. If you would invest  6,731  in Uber Technologies on July 19, 2024 and sell it today you would earn a total of  1,459  from holding Uber Technologies or generate 21.68% return on investment over 90 days.

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

Uber Technologies  vs.  Nextera Energy Partners

Uber Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Nextera Energy Partners

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nextera Energy Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Nextera Energy is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Uber Technologies and Nextera Energy

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

The idea behind Uber Technologies and Nextera Energy Partners 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.