Correlation Between Universal Insurance and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Host Hotels 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 Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on Universal Insurance and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Host Hotels.
Diversification Opportunities for Universal Insurance and Host Hotels
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Host is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Universal Insurance i.e., Universal Insurance and Host Hotels go up and down completely randomly.
Pair Corralation between Universal Insurance and Host Hotels
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 1.61 times more return on investment than Host Hotels. However, Universal Insurance is 1.61 times more volatile than Host Hotels Resorts. It trades about -0.07 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.27 per unit of risk. If you would invest 1,960 in Universal Insurance Holdings on October 31, 2024 and sell it today you would lose (60.00) from holding Universal Insurance Holdings or give up 3.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Host Hotels Resorts
Performance |
| Timeline |
| Universal Insurance |
| Host Hotels Resorts |
Universal Insurance and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Host Hotels
The main advantage of trading using opposite Universal Insurance and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Universal Insurance vs. Allegheny Technologies Incorporated | Universal Insurance vs. Minerals Technologies | Universal Insurance vs. Easy Software AG | Universal Insurance vs. CODERE ONLINE LUX |
| Host Hotels vs. Salesforce | Host Hotels vs. Aluminum of | Host Hotels vs. AMAG Austria Metall | Host Hotels vs. FIREWEED METALS P |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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