Correlation Between Story and UMA

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

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

Diversification Opportunities for Story and UMA

0.61

Correlation Coefficient

Story  UMA

Poor diversification

The 3 months correlation between Story and UMA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Story and UMA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMA and Story 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 Story are associated (or correlated) with UMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMA has no effect on the direction of Story i.e., Story and UMA go up and down completely randomly.

Pair Corralation between Story and UMA

Assuming the 90 days horizon Story is expected to generate 1.16 times less return on investment than UMA. In addition to that, Story is 1.01 times more volatile than UMA. It trades about 0.08 of its total potential returns per unit of risk. UMA is currently generating about 0.1 per unit of volatility. If you would invest  122.00  in UMA on April 24, 2025 and sell it today you would earn a total of  40.00  from holding UMA or generate 32.79% return on investment over 90 days.

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

Story  vs.  UMA

Story

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Story are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Story exhibited solid returns over the last few months and may actually be approaching a breakup point.

UMA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UMA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UMA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Story and UMA

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

The idea behind Story and UMA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.