Correlation Between Universal Health and Trellus Health
Can any of the company-specific risk be diversified away by investing in both Universal Health and Trellus Health 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 Trellus Health 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 Trellus Health plc, you can compare the effects of market volatilities on Universal Health and Trellus Health 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 Trellus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Trellus Health.
Diversification Opportunities for Universal Health and Trellus Health
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Trellus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of Universal Health i.e., Universal Health and Trellus Health go up and down completely randomly.
Pair Corralation between Universal Health and Trellus Health
Assuming the 90 days trading horizon Universal Health Services is expected to generate 0.37 times more return on investment than Trellus Health. However, Universal Health Services is 2.72 times less risky than Trellus Health. It trades about 0.04 of its potential returns per unit of risk. Trellus Health plc is currently generating about -0.08 per unit of risk. If you would invest 14,835 in Universal Health Services on October 12, 2024 and sell it today you would earn a total of 3,644 from holding Universal Health Services or generate 24.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.75% |
| Values | Daily Returns |
Universal Health Services vs. Trellus Health plc
Performance |
| Timeline |
| Universal Health Services |
| Trellus Health plc |
Universal Health and Trellus Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Trellus Health
The main advantage of trading using opposite Universal Health and Trellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Trellus Health 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 Trellus Health will offset losses from the drop in Trellus Health's long position.| Universal Health vs. Ubisoft Entertainment | Universal Health vs. Live Nation Entertainment | Universal Health vs. Flutter Entertainment PLC | Universal Health vs. Hollywood Bowl Group |
| Trellus Health vs. Berkshire Hathaway | Trellus Health vs. Samsung Electronics Co | Trellus Health vs. Samsung Electronics Co | Trellus Health vs. Chocoladefabriken Lindt Spruengli |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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