Correlation Between Universal Insurance and G-III Apparel
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and G-III Apparel 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 G-III Apparel 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 G III Apparel Group, you can compare the effects of market volatilities on Universal Insurance and G-III Apparel 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 G-III Apparel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and G-III Apparel.
Diversification Opportunities for Universal Insurance and G-III Apparel
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Universal and G-III is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G-III Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Universal Insurance i.e., Universal Insurance and G-III Apparel go up and down completely randomly.
Pair Corralation between Universal Insurance and G-III Apparel
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the G-III Apparel. But the stock apears to be less risky and, when comparing its historical volatility, Universal Insurance Holdings is 1.03 times less risky than G-III Apparel. The stock trades about -0.24 of its potential returns per unit of risk. The G III Apparel Group is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 3,280 in G III Apparel Group on October 13, 2024 and sell it today you would lose (220.00) from holding G III Apparel Group or give up 6.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Universal Insurance Holdings vs. G III Apparel Group
Performance |
| Timeline |
| Universal Insurance |
| G III Apparel |
Universal Insurance and G-III Apparel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and G-III Apparel
The main advantage of trading using opposite Universal Insurance and G-III Apparel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, G-III Apparel 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 G-III Apparel will offset losses from the drop in G-III Apparel's long position.| Universal Insurance vs. Synchrony Financial | Universal Insurance vs. Erste Group Bank | Universal Insurance vs. InterContinental Hotels Group | Universal Insurance vs. UNIQA INSURANCE GR |
| G-III Apparel vs. Zoom Video Communications | G-III Apparel vs. HANOVER INSURANCE | G-III Apparel vs. REVO INSURANCE SPA | G-III Apparel vs. Universal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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