Correlation Between Universal Insurance and PLAYTIKA HOLDING
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01, you can compare the effects of market volatilities on Universal Insurance and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and PLAYTIKA HOLDING.
Diversification Opportunities for Universal Insurance and PLAYTIKA HOLDING
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and PLAYTIKA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and PLAYTIKA HOLDING DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTIKA HOLDING 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 PLAYTIKA HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTIKA HOLDING has no effect on the direction of Universal Insurance i.e., Universal Insurance and PLAYTIKA HOLDING go up and down completely randomly.
Pair Corralation between Universal Insurance and PLAYTIKA HOLDING
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 0.43 times more return on investment than PLAYTIKA HOLDING. However, Universal Insurance Holdings is 2.32 times less risky than PLAYTIKA HOLDING. It trades about -0.32 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about -0.47 per unit of risk. If you would invest 2,124 in Universal Insurance Holdings on October 1, 2024 and sell it today you would lose (124.00) from holding Universal Insurance Holdings or give up 5.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. PLAYTIKA HOLDING DL 01
Performance |
| Timeline |
| Universal Insurance |
| PLAYTIKA HOLDING |
Universal Insurance and PLAYTIKA HOLDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and PLAYTIKA HOLDING
The main advantage of trading using opposite Universal Insurance and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, PLAYTIKA HOLDING 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 PLAYTIKA HOLDING will offset losses from the drop in PLAYTIKA HOLDING's long position.| Universal Insurance vs. CVS Health | Universal Insurance vs. FEMALE HEALTH | Universal Insurance vs. Cardinal Health | Universal Insurance vs. Ramsay Health Care |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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