Correlation Between H2O Retailing and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both H2O Retailing 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 H2O Retailing and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and Universal Insurance Holdings, you can compare the effects of market volatilities on H2O Retailing 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 H2O Retailing with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and Universal Insurance.
Diversification Opportunities for H2O Retailing and Universal Insurance
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between H2O and Universal is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and H2O Retailing 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 H2O Retailing 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 H2O Retailing i.e., H2O Retailing and Universal Insurance go up and down completely randomly.
Pair Corralation between H2O Retailing and Universal Insurance
Assuming the 90 days horizon H2O Retailing is expected to generate 1.07 times more return on investment than Universal Insurance. However, H2O Retailing is 1.07 times more volatile than Universal Insurance Holdings. It trades about 0.07 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about -0.18 per unit of risk. If you would invest 1,340 in H2O Retailing on October 23, 2024 and sell it today you would earn a total of 30.00 from holding H2O Retailing or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. Universal Insurance Holdings
Performance |
| Timeline |
| H2O Retailing |
| Universal Insurance |
H2O Retailing and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and Universal Insurance
The main advantage of trading using opposite H2O Retailing and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing 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.| H2O Retailing vs. BW OFFSHORE LTD | H2O Retailing vs. British American Tobacco | H2O Retailing vs. MOLSON RS BEVERAGE | H2O Retailing vs. Ebro Foods SA |
| Universal Insurance vs. TYSON FOODS A | Universal Insurance vs. Sumitomo Rubber Industries | Universal Insurance vs. Nomad Foods | Universal Insurance vs. Clean Energy Fuels |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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