Correlation Between Universal Health and Amazon
Can any of the company-specific risk be diversified away by investing in both Universal Health and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on Universal Health and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Amazon.
Diversification Opportunities for Universal Health and Amazon
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Amazon is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Universal Health i.e., Universal Health and Amazon go up and down completely randomly.
Pair Corralation between Universal Health and Amazon
Assuming the 90 days trading horizon Universal Health Services is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Services is 1.25 times less risky than Amazon. The stock trades about -0.01 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 18,775 in Amazon Inc on September 24, 2024 and sell it today you would earn a total of 3,775 from holding Amazon Inc or generate 20.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Universal Health Services vs. Amazon Inc
Performance |
| Timeline |
| Universal Health Services |
| Amazon Inc |
Universal Health and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Amazon
The main advantage of trading using opposite Universal Health and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon'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 |
| Amazon vs. Primary Health Properties | Amazon vs. Universal Health Services | Amazon vs. Celebrus Technologies plc | Amazon vs. PureTech Health plc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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