Correlation Between Universal Insurance and ASOS PLC
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and ASOS PLC 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 ASOS PLC 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 ASOS PLC, you can compare the effects of market volatilities on Universal Insurance and ASOS PLC 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 ASOS PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and ASOS PLC.
Diversification Opportunities for Universal Insurance and ASOS PLC
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and ASOS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and ASOS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS PLC 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 ASOS PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS PLC has no effect on the direction of Universal Insurance i.e., Universal Insurance and ASOS PLC go up and down completely randomly.
Pair Corralation between Universal Insurance and ASOS PLC
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 0.53 times more return on investment than ASOS PLC. However, Universal Insurance Holdings is 1.9 times less risky than ASOS PLC. It trades about 0.38 of its potential returns per unit of risk. ASOS PLC is currently generating about 0.09 per unit of risk. If you would invest 1,820 in Universal Insurance Holdings on September 2, 2024 and sell it today you would earn a total of 340.00 from holding Universal Insurance Holdings or generate 18.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. ASOS PLC
Performance |
| Timeline |
| Universal Insurance |
| ASOS PLC |
Universal Insurance and ASOS PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and ASOS PLC
The main advantage of trading using opposite Universal Insurance and ASOS PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, ASOS PLC 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 ASOS PLC will offset losses from the drop in ASOS PLC's long position.| Universal Insurance vs. Diamyd Medical AB | Universal Insurance vs. Microbot Medical | Universal Insurance vs. Apollo Medical Holdings | Universal Insurance vs. Japan Medical Dynamic |
| ASOS PLC vs. SBA Communications Corp | ASOS PLC vs. Universal Insurance Holdings | ASOS PLC vs. The Hanover Insurance | ASOS PLC vs. United Insurance Holdings |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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