Correlation Between Universal Insurance and FOX P
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and FOX P 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 FOX P 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 FOX P B, you can compare the effects of market volatilities on Universal Insurance and FOX P 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 FOX P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and FOX P.
Diversification Opportunities for Universal Insurance and FOX P
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and FOX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and FOX P B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOX P B 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 FOX P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOX P B has no effect on the direction of Universal Insurance i.e., Universal Insurance and FOX P go up and down completely randomly.
Pair Corralation between Universal Insurance and FOX P
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 1.06 times more return on investment than FOX P. However, Universal Insurance is 1.06 times more volatile than FOX P B. It trades about 0.21 of its potential returns per unit of risk. FOX P B is currently generating about 0.22 per unit of risk. If you would invest 1,717 in Universal Insurance Holdings on September 13, 2024 and sell it today you would earn a total of 343.00 from holding Universal Insurance Holdings or generate 19.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. FOX P B
Performance |
| Timeline |
| Universal Insurance |
| FOX P B |
Universal Insurance and FOX P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and FOX P
The main advantage of trading using opposite Universal Insurance and FOX P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, FOX P 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 FOX P will offset losses from the drop in FOX P's long position.| Universal Insurance vs. QBE Insurance Group | Universal Insurance vs. Insurance Australia Group | Universal Insurance vs. Superior Plus Corp | Universal Insurance vs. SIVERS SEMICONDUCTORS AB |
| FOX P vs. Universal Insurance Holdings | FOX P vs. HANOVER INSURANCE | FOX P vs. DICKS Sporting Goods | FOX P vs. LIFENET INSURANCE CO |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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