Correlation Between Universal Health and Take Two
Can any of the company-specific risk be diversified away by investing in both Universal Health and Take Two 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 Universal Health and Take Two into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services, and Take Two Interactive Software, you can compare the effects of market volatilities on Universal Health and Take Two 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 Universal Health with a short position of Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Take Two.
Diversification Opportunities for Universal Health and Take Two
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Take is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services, and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive and Universal 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 Universal Health Services, are associated (or correlated) with Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Universal Health i.e., Universal Health and Take Two go up and down completely randomly.
Pair Corralation between Universal Health and Take Two
Assuming the 90 days trading horizon Universal Health Services, is expected to under-perform the Take Two. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Services, is 1.08 times less risky than Take Two. The stock trades about 0.0 of its potential returns per unit of risk. The Take Two Interactive Software is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 21,021 in Take Two Interactive Software on October 18, 2024 and sell it today you would earn a total of 6,332 from holding Take Two Interactive Software or generate 30.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Health Services, vs. Take Two Interactive Software
Performance |
| Timeline |
| Universal Health Ser |
| Take Two Interactive |
Universal Health and Take Two Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Take Two
The main advantage of trading using opposite Universal Health and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Take Two 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 Take Two will offset losses from the drop in Take Two's long position.| Universal Health vs. HCA Healthcare, | Universal Health vs. Rede DOr So | Universal Health vs. DaVita Inc | Universal Health vs. Hospital Mater Dei |
| Take Two vs. Guidewire Software, | Take Two vs. Eastman Chemical | Take Two vs. Micron Technology | Take Two vs. Broadridge Financial Solutions, |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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