Correlation Between SEDANA MEDICAL and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both SEDANA MEDICAL and Universal Insurance 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 SEDANA MEDICAL and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEDANA MEDICAL AB and Universal Insurance Holdings, you can compare the effects of market volatilities on SEDANA MEDICAL and Universal Insurance 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 SEDANA MEDICAL with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEDANA MEDICAL and Universal Insurance.
Diversification Opportunities for SEDANA MEDICAL and Universal Insurance
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SEDANA and Universal is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding SEDANA MEDICAL AB and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and SEDANA MEDICAL 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 SEDANA MEDICAL AB are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of SEDANA MEDICAL i.e., SEDANA MEDICAL and Universal Insurance go up and down completely randomly.
Pair Corralation between SEDANA MEDICAL and Universal Insurance
Assuming the 90 days trading horizon SEDANA MEDICAL AB is expected to generate 2.72 times more return on investment than Universal Insurance. However, SEDANA MEDICAL is 2.72 times more volatile than Universal Insurance Holdings. It trades about 0.13 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.34 per unit of risk. If you would invest 94.00 in SEDANA MEDICAL AB on September 4, 2024 and sell it today you would earn a total of 13.00 from holding SEDANA MEDICAL AB or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SEDANA MEDICAL AB vs. Universal Insurance Holdings
Performance |
| Timeline |
| SEDANA MEDICAL AB |
| Universal Insurance |
SEDANA MEDICAL and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEDANA MEDICAL and Universal Insurance
The main advantage of trading using opposite SEDANA MEDICAL and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEDANA MEDICAL position performs unexpectedly, Universal Insurance 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 Insurance will offset losses from the drop in Universal Insurance's long position.| SEDANA MEDICAL vs. Cogent Communications Holdings | SEDANA MEDICAL vs. RETAIL FOOD GROUP | SEDANA MEDICAL vs. Costco Wholesale Corp | SEDANA MEDICAL vs. Entravision Communications |
| Universal Insurance vs. The Progressive | Universal Insurance vs. The Allstate | Universal Insurance vs. PICC Property and | Universal Insurance vs. Fairfax Financial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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