Correlation Between Grand Canyon and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Grand Canyon 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 Grand Canyon and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and Universal Insurance Holdings, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Universal Insurance.
Diversification Opportunities for Grand Canyon and Universal Insurance
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grand and Universal is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and Universal Insurance go up and down completely randomly.
Pair Corralation between Grand Canyon and Universal Insurance
Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 0.8 times more return on investment than Universal Insurance. However, Grand Canyon Education is 1.24 times less risky than Universal Insurance. It trades about 0.1 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.03 per unit of risk. If you would invest 12,600 in Grand Canyon Education on December 10, 2024 and sell it today you would earn a total of 3,200 from holding Grand Canyon Education or generate 25.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. Universal Insurance Holdings
Performance |
| Timeline |
| Grand Canyon Education |
| Universal Insurance |
Grand Canyon and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and Universal Insurance
The main advantage of trading using opposite Grand Canyon and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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.| Grand Canyon vs. Kingdee International Software | Grand Canyon vs. Computershare Limited | Grand Canyon vs. LG Display Co | Grand Canyon vs. CompuGroup Medical SE |
| Universal Insurance vs. SBM OFFSHORE | Universal Insurance vs. Eastman Chemical | Universal Insurance vs. Mitsui Chemicals | Universal Insurance vs. Silicon Motion Technology |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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