Correlation Between Universal Insurance and Gaming
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Gaming 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 Insurance and Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and Gaming and Leisure, you can compare the effects of market volatilities on Universal Insurance and Gaming 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 Insurance with a short position of Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Gaming.
Diversification Opportunities for Universal Insurance and Gaming
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Gaming is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure and Universal Insurance 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 Insurance Holdings are associated (or correlated) with Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Universal Insurance i.e., Universal Insurance and Gaming go up and down completely randomly.
Pair Corralation between Universal Insurance and Gaming
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the Gaming. In addition to that, Universal Insurance is 1.34 times more volatile than Gaming and Leisure. It trades about -0.18 of its total potential returns per unit of risk. Gaming and Leisure is currently generating about -0.03 per unit of volatility. If you would invest 4,584 in Gaming and Leisure on October 29, 2024 and sell it today you would lose (41.00) from holding Gaming and Leisure or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Gaming and Leisure
Performance |
| Timeline |
| Universal Insurance |
| Gaming and Leisure |
Universal Insurance and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Gaming
The main advantage of trading using opposite Universal Insurance and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| Universal Insurance vs. Siemens Healthineers AG | Universal Insurance vs. CARDINAL HEALTH | Universal Insurance vs. OPKO HEALTH | Universal Insurance vs. Planet Fitness |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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