Correlation Between AECOM and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both AECOM 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 AECOM and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM and Universal Insurance Holdings, you can compare the effects of market volatilities on AECOM 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 AECOM with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM and Universal Insurance.
Diversification Opportunities for AECOM and Universal Insurance
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AECOM and Universal is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AECOM and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and AECOM 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 AECOM 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 AECOM i.e., AECOM and Universal Insurance go up and down completely randomly.
Pair Corralation between AECOM and Universal Insurance
Assuming the 90 days horizon AECOM is expected to generate 1.36 times less return on investment than Universal Insurance. In addition to that, AECOM is 1.34 times more volatile than Universal Insurance Holdings. It trades about 0.19 of its total potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.34 per unit of volatility. If you would invest 1,830 in Universal Insurance Holdings on September 5, 2024 and sell it today you would earn a total of 310.00 from holding Universal Insurance Holdings or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM vs. Universal Insurance Holdings
Performance |
| Timeline |
| AECOM |
| Universal Insurance |
AECOM and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM and Universal Insurance
The main advantage of trading using opposite AECOM and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM 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.| AECOM vs. Universal Insurance Holdings | AECOM vs. NetSol Technologies | AECOM vs. United Insurance Holdings | AECOM vs. QBE Insurance Group |
| Universal Insurance vs. The Allstate | Universal Insurance vs. Fairfax Financial Holdings | Universal Insurance vs. QBE Insurance Group | Universal Insurance vs. Insurance Australia 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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