Correlation Between Universal Health and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Universal Health and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on Universal Health and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and DFS Furniture.
Diversification Opportunities for Universal Health and DFS Furniture
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and DFS is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Universal Health i.e., Universal Health and DFS Furniture go up and down completely randomly.
Pair Corralation between Universal Health and DFS Furniture
Assuming the 90 days trading horizon Universal Health Services is expected to generate 1.06 times more return on investment than DFS Furniture. However, Universal Health is 1.06 times more volatile than DFS Furniture PLC. It trades about 0.06 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about -0.2 per unit of risk. If you would invest 18,179 in Universal Health Services on October 18, 2024 and sell it today you would earn a total of 258.00 from holding Universal Health Services or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Universal Health Services vs. DFS Furniture PLC
Performance |
| Timeline |
| Universal Health Services |
| DFS Furniture PLC |
Universal Health and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and DFS Furniture
The main advantage of trading using opposite Universal Health and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Universal Health vs. Sydbank | Universal Health vs. Alaska Air Group | Universal Health vs. TBC Bank Group | Universal Health vs. Cembra Money Bank |
| DFS Furniture vs. Universal Health Services | DFS Furniture vs. Datagroup SE | DFS Furniture vs. Induction Healthcare Group | DFS Furniture vs. Worldwide Healthcare Trust |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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