Correlation Between Universal Health and First
Can any of the company-specific risk be diversified away by investing in both Universal Health and First 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 First 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 First Class Metals, you can compare the effects of market volatilities on Universal Health and First 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 First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and First.
Diversification Opportunities for Universal Health and First
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and First is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals 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 First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of Universal Health i.e., Universal Health and First go up and down completely randomly.
Pair Corralation between Universal Health and First
Assuming the 90 days trading horizon Universal Health Services is expected to generate 0.5 times more return on investment than First. However, Universal Health Services is 1.99 times less risky than First. It trades about 0.15 of its potential returns per unit of risk. First Class Metals is currently generating about -0.15 per unit of risk. If you would invest 18,227 in Universal Health Services on November 7, 2024 and sell it today you would earn a total of 822.00 from holding Universal Health Services or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Universal Health Services vs. First Class Metals
Performance |
| Timeline |
| Universal Health Services |
| First Class Metals |
Universal Health and First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and First
The main advantage of trading using opposite Universal Health and First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, First 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 First will offset losses from the drop in First's long position.| Universal Health vs. Europa Metals | Universal Health vs. Capital Metals PLC | Universal Health vs. Take Two Interactive Software | Universal Health vs. Power Metal Resources |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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