Correlation Between Universal Insurance and OPKO HEALTH
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and OPKO HEALTH 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 OPKO HEALTH 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 OPKO HEALTH, you can compare the effects of market volatilities on Universal Insurance and OPKO HEALTH 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 OPKO HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and OPKO HEALTH.
Diversification Opportunities for Universal Insurance and OPKO HEALTH
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and OPKO is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and OPKO HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPKO HEALTH 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 OPKO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPKO HEALTH has no effect on the direction of Universal Insurance i.e., Universal Insurance and OPKO HEALTH go up and down completely randomly.
Pair Corralation between Universal Insurance and OPKO HEALTH
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the OPKO HEALTH. In addition to that, Universal Insurance is 1.83 times more volatile than OPKO HEALTH. It trades about -0.27 of its total potential returns per unit of risk. OPKO HEALTH is currently generating about -0.18 per unit of volatility. If you would invest 151.00 in OPKO HEALTH on October 30, 2024 and sell it today you would lose (8.00) from holding OPKO HEALTH or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. OPKO HEALTH
Performance |
| Timeline |
| Universal Insurance |
| OPKO HEALTH |
Universal Insurance and OPKO HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and OPKO HEALTH
The main advantage of trading using opposite Universal Insurance and OPKO HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, OPKO HEALTH 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 OPKO HEALTH will offset losses from the drop in OPKO HEALTH's long position.| Universal Insurance vs. The Japan Steel | Universal Insurance vs. Synchrony Financial | Universal Insurance vs. CHAMPION IRON | Universal Insurance vs. Webster Financial |
| OPKO HEALTH vs. Nucletron Electronic Aktiengesellschaft | OPKO HEALTH vs. Molson Coors Beverage | OPKO HEALTH vs. Arrow Electronics | OPKO HEALTH vs. ARROW ELECTRONICS |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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