Correlation Between Universal Health and URU Metals
Can any of the company-specific risk be diversified away by investing in both Universal Health and URU Metals 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 URU Metals 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 URU Metals, you can compare the effects of market volatilities on Universal Health and URU Metals 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 URU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and URU Metals.
Diversification Opportunities for Universal Health and URU Metals
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and URU is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of Universal Health i.e., Universal Health and URU Metals go up and down completely randomly.
Pair Corralation between Universal Health and URU Metals
Assuming the 90 days trading horizon Universal Health is expected to generate 2.0 times less return on investment than URU Metals. But when comparing it to its historical volatility, Universal Health Services is 3.8 times less risky than URU Metals. It trades about 0.04 of its potential returns per unit of risk. URU Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 20,000 in URU Metals on October 27, 2024 and sell it today you would lose (5,000) from holding URU Metals or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.95% |
| Values | Daily Returns |
Universal Health Services vs. URU Metals
Performance |
| Timeline |
| Universal Health Services |
| URU Metals |
Universal Health and URU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and URU Metals
The main advantage of trading using opposite Universal Health and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, URU Metals 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 URU Metals will offset losses from the drop in URU Metals' long position.| Universal Health vs. Planet Fitness Cl | Universal Health vs. Fevertree Drinks Plc | Universal Health vs. Axway Software SA | Universal Health vs. Optima Health plc |
| URU Metals vs. Zoom Video Communications | URU Metals vs. Enbridge | URU Metals vs. Endo International PLC | URU Metals vs. Walmart |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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