Correlation Between Ares AcquisitionII and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Ares AcquisitionII 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 Ares AcquisitionII and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Acquisition and Universal Insurance Holdings, you can compare the effects of market volatilities on Ares AcquisitionII 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 Ares AcquisitionII with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares AcquisitionII and Universal Insurance.
Diversification Opportunities for Ares AcquisitionII and Universal Insurance
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ares and Universal is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ares Acquisition and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Ares AcquisitionII 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 Ares Acquisition 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 Ares AcquisitionII i.e., Ares AcquisitionII and Universal Insurance go up and down completely randomly.
Pair Corralation between Ares AcquisitionII and Universal Insurance
Assuming the 90 days trading horizon Ares Acquisition is expected to generate 0.62 times more return on investment than Universal Insurance. However, Ares Acquisition is 1.63 times less risky than Universal Insurance. It trades about 0.09 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about -0.23 per unit of risk. If you would invest 1,124 in Ares Acquisition on October 23, 2024 and sell it today you would earn a total of 16.00 from holding Ares Acquisition or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Acquisition vs. Universal Insurance Holdings
Performance |
| Timeline |
| Ares AcquisitionII |
| Universal Insurance |
Ares AcquisitionII and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares AcquisitionII and Universal Insurance
The main advantage of trading using opposite Ares AcquisitionII and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares AcquisitionII 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.| Ares AcquisitionII vs. Universal Insurance Holdings | Ares AcquisitionII vs. Scandinavian Tobacco Group | Ares AcquisitionII vs. BRC Inc | Ares AcquisitionII vs. Japan Tobacco ADR |
| Universal Insurance vs. HCI Group | Universal Insurance vs. Kingstone Companies | Universal Insurance vs. Horace Mann Educators | Universal Insurance vs. Heritage Insurance Hldgs |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |