Correlation Between Amedisys and Universal Health
Can any of the company-specific risk be diversified away by investing in both Amedisys and Universal 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 Amedisys and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedisys and Universal Health Services, you can compare the effects of market volatilities on Amedisys and Universal 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 Amedisys with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedisys and Universal Health.
Diversification Opportunities for Amedisys and Universal Health
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amedisys and Universal is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and Amedisys 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 Amedisys are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Amedisys i.e., Amedisys and Universal Health go up and down completely randomly.
Pair Corralation between Amedisys and Universal Health
Given the investment horizon of 90 days Amedisys is expected to generate 9.83 times less return on investment than Universal Health. But when comparing it to its historical volatility, Amedisys is 1.16 times less risky than Universal Health. It trades about 0.01 of its potential returns per unit of risk. Universal Health Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,622 in Universal Health Services on August 24, 2024 and sell it today you would earn a total of 7,172 from holding Universal Health Services or generate 56.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amedisys vs. Universal Health Services
Performance |
| Timeline |
| Amedisys |
| Universal Health Services |
Amedisys and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amedisys and Universal Health
The main advantage of trading using opposite Amedisys and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedisys position performs unexpectedly, Universal 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 Universal Health will offset losses from the drop in Universal Health's long position.| Amedisys vs. Addus HomeCare | Amedisys vs. Morningstar Unconstrained Allocation | Amedisys vs. SEI Investments | Amedisys vs. Goosehead Insurance |
| Universal Health vs. The Ensign Group | Universal Health vs. Addus HomeCare | Universal Health vs. Encompass Health Corp | Universal Health vs. Surgery Partners |
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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