Correlation Between Ashtead Technology and Universal Health
Can any of the company-specific risk be diversified away by investing in both Ashtead Technology 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 Ashtead Technology and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Technology Holdings and Universal Health Services, you can compare the effects of market volatilities on Ashtead Technology 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 Ashtead Technology with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and Universal Health.
Diversification Opportunities for Ashtead Technology and Universal Health
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ashtead and Universal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings 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 Ashtead Technology 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 Ashtead Technology Holdings 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 Ashtead Technology i.e., Ashtead Technology and Universal Health go up and down completely randomly.
Pair Corralation between Ashtead Technology and Universal Health
Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 1.43 times more return on investment than Universal Health. However, Ashtead Technology is 1.43 times more volatile than Universal Health Services. It trades about 0.02 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.04 per unit of risk. If you would invest 52,500 in Ashtead Technology Holdings on October 13, 2024 and sell it today you would earn a total of 100.00 from holding Ashtead Technology Holdings or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Ashtead Technology Holdings vs. Universal Health Services
Performance |
| Timeline |
| Ashtead Technology |
| Universal Health Services |
Ashtead Technology and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Technology and Universal Health
The main advantage of trading using opposite Ashtead Technology and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology 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.| Ashtead Technology vs. CNH Industrial NV | Ashtead Technology vs. Jacquet Metal Service | Ashtead Technology vs. Lundin Mining Corp | Ashtead Technology vs. Foresight Environmental Infrastructure |
| Universal Health vs. Ubisoft Entertainment | Universal Health vs. Live Nation Entertainment | Universal Health vs. Flutter Entertainment PLC | Universal Health vs. Hollywood Bowl Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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