Correlation Between Laureate Education and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Laureate Education 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 Laureate Education and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and Universal Insurance Holdings, you can compare the effects of market volatilities on Laureate Education 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 Laureate Education with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and Universal Insurance.
Diversification Opportunities for Laureate Education and Universal Insurance
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Laureate and Universal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Laureate 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 Laureate Education 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 Laureate 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 Laureate Education i.e., Laureate Education and Universal Insurance go up and down completely randomly.
Pair Corralation between Laureate Education and Universal Insurance
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.79 times more return on investment than Universal Insurance. However, Laureate Education is 1.27 times less risky than Universal Insurance. It trades about 0.07 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.05 per unit of risk. If you would invest 1,077 in Laureate Education on August 31, 2024 and sell it today you would earn a total of 703.00 from holding Laureate Education or generate 65.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Laureate Education vs. Universal Insurance Holdings
Performance |
| Timeline |
| Laureate Education |
| Universal Insurance |
Laureate Education and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and Universal Insurance
The main advantage of trading using opposite Laureate Education and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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.| Laureate Education vs. Universal Insurance Holdings | Laureate Education vs. Zurich Insurance Group | Laureate Education vs. HANOVER INSURANCE | Laureate Education vs. Perseus Mining Limited |
| Universal Insurance vs. The Progressive | Universal Insurance vs. Fairfax Financial Holdings | 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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