Correlation Between PureTech Health and Universal Health
Can any of the company-specific risk be diversified away by investing in both PureTech Health 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 PureTech Health and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Universal Health Services, you can compare the effects of market volatilities on PureTech Health 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 PureTech Health with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Universal Health.
Diversification Opportunities for PureTech Health and Universal Health
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PureTech and Universal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and PureTech Health 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 PureTech Health plc 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 Services has no effect on the direction of PureTech Health i.e., PureTech Health and Universal Health go up and down completely randomly.
Pair Corralation between PureTech Health and Universal Health
Assuming the 90 days trading horizon PureTech Health plc is expected to generate 1.79 times more return on investment than Universal Health. However, PureTech Health is 1.79 times more volatile than Universal Health Services. It trades about -0.17 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.34 per unit of risk. If you would invest 17,040 in PureTech Health plc on September 24, 2024 and sell it today you would lose (1,580) from holding PureTech Health plc or give up 9.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
PureTech Health plc vs. Universal Health Services
Performance |
| Timeline |
| PureTech Health plc |
| Universal Health Services |
PureTech Health and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Universal Health
The main advantage of trading using opposite PureTech Health and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health 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.| PureTech Health vs. Toyota Motor Corp | PureTech Health vs. SoftBank Group Corp | PureTech Health vs. OTP Bank Nyrt | PureTech Health vs. Public Service Enterprise |
| Universal Health vs. Uniper SE | Universal Health vs. Mulberry Group PLC | Universal Health vs. London Security Plc | Universal Health vs. Triad Group PLC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |