Correlation Between Five9 and Universal Stainless

Can any of the company-specific risk be diversified away by investing in both Five9 and Universal Stainless 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 Five9 and Universal Stainless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Five9 Inc and Universal Stainless Alloy, you can compare the effects of market volatilities on Five9 and Universal Stainless 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 Five9 with a short position of Universal Stainless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five9 and Universal Stainless.

Diversification Opportunities for Five9 and Universal Stainless

-0.68

Correlation Coefficient

Five9  Universal Stainless

Excellent diversification

The 3 months correlation between Five9 and Universal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Five9 Inc and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy and Five9 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 Five9 Inc are associated (or correlated) with Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of Five9 i.e., Five9 and Universal Stainless go up and down completely randomly.

Pair Corralation between Five9 and Universal Stainless

Given the investment horizon of 90 days Five9 Inc is expected to under-perform the Universal Stainless. But the stock apears to be less risky and, when comparing its historical volatility, Five9 Inc is 1.44 times less risky than Universal Stainless. The stock trades about -0.1 of its potential returns per unit of risk. The Universal Stainless Alloy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,654  in Universal Stainless Alloy on January 29, 2024 and sell it today you would earn a total of  1.00  from holding Universal Stainless Alloy or generate 0.04% return on investment over 90 days.

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

Five9 Inc  vs.  Universal Stainless Alloy

Five9 Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Five9 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Universal Stainless Alloy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Universal Stainless reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Five9 and Universal Stainless

The main advantage of trading using opposite Five9 and Universal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five9 position performs unexpectedly, Universal Stainless 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 Universal Stainless will offset losses from the drop in Universal Stainless' long position.

The idea behind Five9 Inc and Universal Stainless Alloy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.