Correlation Between Transport International and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Universal Insurance Holdings, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Universal Insurance.
Diversification Opportunities for Transport International and Universal Insurance
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Transport and Universal is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Universal Insurance go up and down completely randomly.
Pair Corralation between Transport International and Universal Insurance
Assuming the 90 days horizon Transport International Holdings is expected to generate 1.82 times more return on investment than Universal Insurance. However, Transport International is 1.82 times more volatile than Universal Insurance Holdings. It trades about 0.04 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.07 per unit of risk. If you would invest 62.00 in Transport International Holdings on September 26, 2024 and sell it today you would earn a total of 32.00 from holding Transport International Holdings or generate 51.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Universal Insurance Holdings
Performance |
| Timeline |
| Transport International |
| Universal Insurance |
Transport International and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Universal Insurance
The main advantage of trading using opposite Transport International and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. Canadian National Railway | Transport International vs. MTR Limited | Transport International vs. CRRC Limited | Transport International vs. Central Japan Railway |
| Universal Insurance vs. Transportadora de Gas | Universal Insurance vs. SPORT LISBOA E | Universal Insurance vs. Transport International Holdings | Universal Insurance vs. Columbia Sportswear |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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