Correlation Between Universal Insurance and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and INSURANCE AUST 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 INSURANCE AUST 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 INSURANCE AUST GRP, you can compare the effects of market volatilities on Universal Insurance and INSURANCE AUST 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 INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and INSURANCE AUST.
Diversification Opportunities for Universal Insurance and INSURANCE AUST
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and INSURANCE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of Universal Insurance i.e., Universal Insurance and INSURANCE AUST go up and down completely randomly.
Pair Corralation between Universal Insurance and INSURANCE AUST
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 1.35 times more return on investment than INSURANCE AUST. However, Universal Insurance is 1.35 times more volatile than INSURANCE AUST GRP. It trades about 0.41 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.32 per unit of risk. If you would invest 1,780 in Universal Insurance Holdings on August 28, 2024 and sell it today you would earn a total of 360.00 from holding Universal Insurance Holdings or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. INSURANCE AUST GRP
Performance |
| Timeline |
| Universal Insurance |
| INSURANCE AUST GRP |
Universal Insurance and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and INSURANCE AUST
The main advantage of trading using opposite Universal Insurance and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| Universal Insurance vs. Superior Plus Corp | Universal Insurance vs. NMI Holdings | Universal Insurance vs. Origin Agritech | Universal Insurance vs. SIVERS SEMICONDUCTORS AB |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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