Correlation Between MT Bank and Universal Health
Can any of the company-specific risk be diversified away by investing in both MT Bank and Universal Health 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 MT Bank and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank Corp and Universal Health Services, you can compare the effects of market volatilities on MT Bank and Universal Health 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 MT Bank with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Universal Health.
Diversification Opportunities for MT Bank and Universal Health
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 0JW2 and Universal is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and MT Bank 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 MT Bank Corp are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of MT Bank i.e., MT Bank and Universal Health go up and down completely randomly.
Pair Corralation between MT Bank and Universal Health
Assuming the 90 days trading horizon MT Bank Corp is expected to generate 2.14 times more return on investment than Universal Health. However, MT Bank is 2.14 times more volatile than Universal Health Services. It trades about 0.29 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.08 per unit of risk. If you would invest 19,150 in MT Bank Corp on September 3, 2024 and sell it today you would earn a total of 2,849 from holding MT Bank Corp or generate 14.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank Corp vs. Universal Health Services
Performance |
| Timeline |
| MT Bank Corp |
| Universal Health Services |
MT Bank and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Universal Health
The main advantage of trading using opposite MT Bank and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Universal Health 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 Health will offset losses from the drop in Universal Health's long position.| MT Bank vs. Catalyst Media Group | MT Bank vs. CATLIN GROUP | MT Bank vs. Magnora ASA | MT Bank vs. RTW Venture Fund |
| Universal Health vs. AMG Advanced Metallurgical | Universal Health vs. Greenroc Mining PLC | Universal Health vs. Neometals | Universal Health vs. MT Bank Corp |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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