Correlation Between Superior Plus and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Universal Insurance Holdings, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Universal Insurance.
Diversification Opportunities for Superior Plus and Universal Insurance
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Superior and Universal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Universal Insurance go up and down completely randomly.
Pair Corralation between Superior Plus and Universal Insurance
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Universal Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Superior Plus Corp is 1.23 times less risky than Universal Insurance. The stock trades about -0.03 of its potential returns per unit of risk. The Universal Insurance Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,422 in Universal Insurance Holdings on August 28, 2024 and sell it today you would earn a total of 718.00 from holding Universal Insurance Holdings or generate 50.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Universal Insurance Holdings
Performance |
| Timeline |
| Superior Plus Corp |
| Universal Insurance |
Superior Plus and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Universal Insurance
The main advantage of trading using opposite Superior Plus and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. Canon Marketing Japan | Superior Plus vs. CANON MARKETING JP | Superior Plus vs. KRISPY KREME DL 01 | Superior Plus vs. SIDETRADE EO 1 |
| Universal Insurance vs. Algonquin Power Utilities | Universal Insurance vs. BE Semiconductor Industries | Universal Insurance vs. NORTHEAST UTILITIES | Universal Insurance vs. SERI INDUSTRIAL EO |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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