Correlation Between Universal Insurance and Covivio SA
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Covivio SA 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 Covivio SA 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 Covivio SA, you can compare the effects of market volatilities on Universal Insurance and Covivio SA 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 Covivio SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Covivio SA.
Diversification Opportunities for Universal Insurance and Covivio SA
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Covivio is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Covivio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio SA 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 Covivio SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio SA has no effect on the direction of Universal Insurance i.e., Universal Insurance and Covivio SA go up and down completely randomly.
Pair Corralation between Universal Insurance and Covivio SA
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 1.7 times more return on investment than Covivio SA. However, Universal Insurance is 1.7 times more volatile than Covivio SA. It trades about 0.08 of its potential returns per unit of risk. Covivio SA is currently generating about 0.02 per unit of risk. If you would invest 879.00 in Universal Insurance Holdings on September 3, 2024 and sell it today you would earn a total of 1,281 from holding Universal Insurance Holdings or generate 145.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Covivio SA
Performance |
| Timeline |
| Universal Insurance |
| Covivio SA |
Universal Insurance and Covivio SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Covivio SA
The main advantage of trading using opposite Universal Insurance and Covivio SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Covivio SA 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 Covivio SA will offset losses from the drop in Covivio SA'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 |
| Covivio SA vs. Fast Retailing Co | Covivio SA vs. BURLINGTON STORES | Covivio SA vs. North American Construction | Covivio SA vs. Dairy Farm International |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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