Correlation Between Targa Resources and Universal Health
Can any of the company-specific risk be diversified away by investing in both Targa Resources 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 Targa Resources and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Targa Resources Corp and Universal Health Services, you can compare the effects of market volatilities on Targa Resources 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 Targa Resources with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Targa Resources and Universal Health.
Diversification Opportunities for Targa Resources and Universal Health
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Targa and Universal is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Targa Resources 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 Targa Resources 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 Targa Resources 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 Targa Resources i.e., Targa Resources and Universal Health go up and down completely randomly.
Pair Corralation between Targa Resources and Universal Health
Assuming the 90 days trading horizon Targa Resources Corp is expected to generate 0.97 times more return on investment than Universal Health. However, Targa Resources Corp is 1.03 times less risky than Universal Health. It trades about 0.17 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.1 per unit of risk. If you would invest 14,816 in Targa Resources Corp on November 2, 2024 and sell it today you would earn a total of 5,657 from holding Targa Resources Corp or generate 38.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.23% |
| Values | Daily Returns |
Targa Resources Corp vs. Universal Health Services
Performance |
| Timeline |
| Targa Resources Corp |
| Universal Health Services |
Targa Resources and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Targa Resources and Universal Health
The main advantage of trading using opposite Targa Resources and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Targa Resources 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.| Targa Resources vs. Berkshire Hathaway | Targa Resources vs. Samsung Electronics Co | Targa Resources vs. Samsung Electronics Co | Targa Resources vs. Chocoladefabriken Lindt Spruengli |
| Universal Health vs. Sabre Insurance Group | Universal Health vs. Endeavour Mining Corp | Universal Health vs. Hollywood Bowl Group | Universal Health vs. UNIQA Insurance Group |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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