Correlation Between New HopeLimited and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both New HopeLimited 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 New HopeLimited and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Hope and Universal Insurance Holdings, you can compare the effects of market volatilities on New HopeLimited 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 New HopeLimited with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of New HopeLimited and Universal Insurance.
Diversification Opportunities for New HopeLimited and Universal Insurance
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Universal is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding New Hope and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and New HopeLimited 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 New Hope 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 New HopeLimited i.e., New HopeLimited and Universal Insurance go up and down completely randomly.
Pair Corralation between New HopeLimited and Universal Insurance
Assuming the 90 days horizon New HopeLimited is expected to generate 64.52 times less return on investment than Universal Insurance. In addition to that, New HopeLimited is 1.36 times more volatile than Universal Insurance Holdings. It trades about 0.0 of its total potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.34 per unit of volatility. If you would invest 1,830 in Universal Insurance Holdings on September 5, 2024 and sell it today you would earn a total of 310.00 from holding Universal Insurance Holdings or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
New Hope vs. Universal Insurance Holdings
Performance |
| Timeline |
| New HopeLimited |
| Universal Insurance |
New HopeLimited and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New HopeLimited and Universal Insurance
The main advantage of trading using opposite New HopeLimited and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New HopeLimited 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.| New HopeLimited vs. Astral Foods Limited | New HopeLimited vs. Autohome ADR | New HopeLimited vs. CSSC Offshore Marine | New HopeLimited vs. DFS Furniture PLC |
| Universal Insurance vs. The Allstate | Universal Insurance vs. Fairfax Financial Holdings | Universal Insurance vs. QBE Insurance Group | 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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