Correlation Between Universal Insurance and Gold Road
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Universal Insurance and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Gold Road.
Diversification Opportunities for Universal Insurance and Gold Road
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and Gold is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Universal Insurance i.e., Universal Insurance and Gold Road go up and down completely randomly.
Pair Corralation between Universal Insurance and Gold Road
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 1.11 times more return on investment than Gold Road. However, Universal Insurance is 1.11 times more volatile than Gold Road Resources. It trades about 0.08 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.08 per unit of risk. If you would invest 1,715 in Universal Insurance Holdings on September 3, 2024 and sell it today you would earn a total of 425.00 from holding Universal Insurance Holdings or generate 24.78% 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. Gold Road Resources
Performance |
| Timeline |
| Universal Insurance |
| Gold Road Resources |
Universal Insurance and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Gold Road
The main advantage of trading using opposite Universal Insurance and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Universal Insurance vs. The Progressive | Universal Insurance vs. The Allstate | Universal Insurance vs. PICC Property and | Universal Insurance vs. Fairfax Financial Holdings |
| Gold Road vs. ZIJIN MINH UNSPADR20 | Gold Road vs. Barrick Gold | Gold Road vs. Superior Plus Corp | Gold Road vs. NMI 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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