Correlation Between Universal Insurance and Universal Entertainment
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment, you can compare the effects of market volatilities on Universal Insurance and Universal Entertainment 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Universal Entertainment.
Diversification Opportunities for Universal Insurance and Universal Entertainment
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Universal is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of Universal Insurance i.e., Universal Insurance and Universal Entertainment go up and down completely randomly.
Pair Corralation between Universal Insurance and Universal Entertainment
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 0.41 times more return on investment than Universal Entertainment. However, Universal Insurance Holdings is 2.46 times less risky than Universal Entertainment. It trades about 0.34 of its potential returns per unit of risk. Universal Entertainment is currently generating about -0.11 per unit of risk. If you would invest 1,830 in Universal Insurance Holdings on September 4, 2024 and sell it today you would earn a total of 310.00 from holding Universal Insurance Holdings or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Universal Entertainment
Performance |
| Timeline |
| Universal Insurance |
| Universal Entertainment |
Universal Insurance and Universal Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Universal Entertainment
The main advantage of trading using opposite Universal Insurance and Universal Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Universal Entertainment 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 Universal Entertainment will offset losses from the drop in Universal Entertainment'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 |
| Universal Entertainment vs. TOTAL GABON | Universal Entertainment vs. Walgreens Boots Alliance | Universal Entertainment vs. Peak Resources Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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