Correlation Between CDN IMPERIAL and Universal Health
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL 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 CDN IMPERIAL and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDN IMPERIAL BANK and Universal Health Services, you can compare the effects of market volatilities on CDN IMPERIAL 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 CDN IMPERIAL with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Universal Health.
Diversification Opportunities for CDN IMPERIAL and Universal Health
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CDN and Universal is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK 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 CDN IMPERIAL 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 CDN IMPERIAL BANK 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 CDN IMPERIAL i.e., CDN IMPERIAL and Universal Health go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and Universal Health
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.32 times more return on investment than Universal Health. However, CDN IMPERIAL BANK is 3.12 times less risky than Universal Health. It trades about 0.32 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.05 per unit of risk. If you would invest 5,168 in CDN IMPERIAL BANK on September 2, 2024 and sell it today you would earn a total of 951.00 from holding CDN IMPERIAL BANK or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. Universal Health Services
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| Universal Health Services |
CDN IMPERIAL and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and Universal Health
The main advantage of trading using opposite CDN IMPERIAL and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL 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.| CDN IMPERIAL vs. SIVERS SEMICONDUCTORS AB | CDN IMPERIAL vs. Darden Restaurants | CDN IMPERIAL vs. Reliance Steel Aluminum | CDN IMPERIAL vs. Q2M Managementberatung AG |
| Universal Health vs. HomeToGo SE | Universal Health vs. Haverty Furniture Companies | Universal Health vs. Neinor Homes SA | Universal Health vs. Strategic Education |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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