Correlation Between Universal Health and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Universal Health and Ally Financial 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 Universal Health and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services and Ally Financial, you can compare the effects of market volatilities on Universal Health and Ally Financial 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 Universal Health with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Ally Financial.
Diversification Opportunities for Universal Health and Ally Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Ally is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Universal Health 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 Universal Health Services are associated (or correlated) with Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Universal Health i.e., Universal Health and Ally Financial go up and down completely randomly.
Pair Corralation between Universal Health and Ally Financial
Assuming the 90 days trading horizon Universal Health Services is expected to generate 0.79 times more return on investment than Ally Financial. However, Universal Health Services is 1.27 times less risky than Ally Financial. It trades about 0.07 of its potential returns per unit of risk. Ally Financial is currently generating about 0.06 per unit of risk. If you would invest 13,637 in Universal Health Services on August 31, 2024 and sell it today you would earn a total of 6,691 from holding Universal Health Services or generate 49.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 88.56% |
| Values | Daily Returns |
Universal Health Services vs. Ally Financial
Performance |
| Timeline |
| Universal Health Services |
| Ally Financial |
Universal Health and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Ally Financial
The main advantage of trading using opposite Universal Health and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.| Universal Health vs. Zegona Communications Plc | Universal Health vs. Silvercorp Metals | Universal Health vs. Darden Restaurants | Universal Health vs. Cairn Homes PLC |
| Ally Financial vs. Wheaton Precious Metals | Ally Financial vs. Solstad Offshore ASA | Ally Financial vs. Coeur Mining | Ally Financial vs. Axway Software SA |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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