Correlation Between Universal Health and Sparebank
Can any of the company-specific risk be diversified away by investing in both Universal Health and Sparebank 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 Sparebank 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 Sparebank 1 SR, you can compare the effects of market volatilities on Universal Health and Sparebank 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 Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Sparebank.
Diversification Opportunities for Universal Health and Sparebank
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Sparebank is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Universal Health i.e., Universal Health and Sparebank go up and down completely randomly.
Pair Corralation between Universal Health and Sparebank
Assuming the 90 days trading horizon Universal Health Services is expected to generate 1.44 times more return on investment than Sparebank. However, Universal Health is 1.44 times more volatile than Sparebank 1 SR. It trades about 0.04 of its potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.05 per unit of risk. If you would invest 14,433 in Universal Health Services on September 26, 2024 and sell it today you would earn a total of 3,689 from holding Universal Health Services or generate 25.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.2% |
| Values | Daily Returns |
Universal Health Services vs. Sparebank 1 SR
Performance |
| Timeline |
| Universal Health Services |
| Sparebank 1 SR |
Universal Health and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Sparebank
The main advantage of trading using opposite Universal Health and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Universal Health vs. Uniper SE | Universal Health vs. Mulberry Group PLC | Universal Health vs. London Security Plc | Universal Health vs. Triad Group PLC |
| Sparebank vs. Atresmedia | Sparebank vs. MediaZest plc | Sparebank vs. Auto Trader Group | Sparebank vs. Prosiebensat 1 Media |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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