Correlation Between Universal Health and Fulgent Genetics
Can any of the company-specific risk be diversified away by investing in both Universal Health and Fulgent Genetics 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 Fulgent Genetics 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 Fulgent Genetics, you can compare the effects of market volatilities on Universal Health and Fulgent Genetics 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 Fulgent Genetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Fulgent Genetics.
Diversification Opportunities for Universal Health and Fulgent Genetics
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Fulgent is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Fulgent Genetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulgent Genetics 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 Fulgent Genetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulgent Genetics has no effect on the direction of Universal Health i.e., Universal Health and Fulgent Genetics go up and down completely randomly.
Pair Corralation between Universal Health and Fulgent Genetics
Considering the 90-day investment horizon Universal Health Services is expected to generate 0.78 times more return on investment than Fulgent Genetics. However, Universal Health Services is 1.27 times less risky than Fulgent Genetics. It trades about -0.1 of its potential returns per unit of risk. Fulgent Genetics is currently generating about -0.09 per unit of risk. If you would invest 23,647 in Universal Health Services on September 2, 2024 and sell it today you would lose (3,147) from holding Universal Health Services or give up 13.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Health Services vs. Fulgent Genetics
Performance |
| Timeline |
| Universal Health Services |
| Fulgent Genetics |
Universal Health and Fulgent Genetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Fulgent Genetics
The main advantage of trading using opposite Universal Health and Fulgent Genetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Fulgent Genetics 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 Fulgent Genetics will offset losses from the drop in Fulgent Genetics' long position.| Universal Health vs. The Ensign Group | Universal Health vs. Addus HomeCare | Universal Health vs. Encompass Health Corp | Universal Health vs. Surgery Partners |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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