Correlation Between Universal Health and Spire Healthcare
Can any of the company-specific risk be diversified away by investing in both Universal Health and Spire Healthcare 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 Spire Healthcare 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 Spire Healthcare Group, you can compare the effects of market volatilities on Universal Health and Spire Healthcare 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 Spire Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Spire Healthcare.
Diversification Opportunities for Universal Health and Spire Healthcare
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Spire is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Spire Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Healthcare 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 Spire Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Healthcare has no effect on the direction of Universal Health i.e., Universal Health and Spire Healthcare go up and down completely randomly.
Pair Corralation between Universal Health and Spire Healthcare
Assuming the 90 days trading horizon Universal Health Services is expected to under-perform the Spire Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Services is 1.04 times less risky than Spire Healthcare. The stock trades about -0.36 of its potential returns per unit of risk. The Spire Healthcare Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 22,000 in Spire Healthcare Group on September 12, 2024 and sell it today you would earn a total of 300.00 from holding Spire Healthcare Group or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Universal Health Services vs. Spire Healthcare Group
Performance |
| Timeline |
| Universal Health Services |
| Spire Healthcare |
Universal Health and Spire Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Spire Healthcare
The main advantage of trading using opposite Universal Health and Spire Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Spire Healthcare 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 Spire Healthcare will offset losses from the drop in Spire Healthcare's long position.| Universal Health vs. Hong Kong Land | Universal Health vs. Neometals | Universal Health vs. Coor Service Management | Universal Health vs. Fidelity Sustainable USD |
| Spire Healthcare vs. Mulberry Group PLC | Spire Healthcare vs. Ikigai Ventures | Spire Healthcare vs. Neometals | Spire Healthcare vs. Coor Service Management |
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.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |