Correlation Between MAHLE Metal and Universal Health
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal and Universal Health 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 MAHLE Metal and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and Universal Health Services,, you can compare the effects of market volatilities on MAHLE Metal and Universal Health 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 MAHLE Metal with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Universal Health.
Diversification Opportunities for MAHLE Metal and Universal Health
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAHLE and Universal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Universal Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Ser and MAHLE Metal 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 MAHLE Metal Leve are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Ser has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Universal Health go up and down completely randomly.
Pair Corralation between MAHLE Metal and Universal Health
Assuming the 90 days trading horizon MAHLE Metal Leve is expected to generate 0.94 times more return on investment than Universal Health. However, MAHLE Metal Leve is 1.06 times less risky than Universal Health. It trades about 0.21 of its potential returns per unit of risk. Universal Health Services, is currently generating about -0.13 per unit of risk. If you would invest 2,663 in MAHLE Metal Leve on November 5, 2024 and sell it today you would earn a total of 172.00 from holding MAHLE Metal Leve or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Universal Health Services,
Performance |
| Timeline |
| MAHLE Metal Leve |
| Universal Health Ser |
MAHLE Metal and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Universal Health
The main advantage of trading using opposite MAHLE Metal and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal position performs unexpectedly, Universal Health 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 Health will offset losses from the drop in Universal Health's long position.| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
| Universal Health vs. Truist Financial | Universal Health vs. Sumitomo Mitsui Financial | Universal Health vs. The Hartford Financial | Universal Health vs. New Oriental Education |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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