Correlation Between Universal Technical and AMREP
Can any of the company-specific risk be diversified away by investing in both Universal Technical and AMREP 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 Technical and AMREP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Technical Institute and AMREP, you can compare the effects of market volatilities on Universal Technical and AMREP 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 Technical with a short position of AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Technical and AMREP.
Diversification Opportunities for Universal Technical and AMREP
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and AMREP is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Universal Technical 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 Technical Institute are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Universal Technical i.e., Universal Technical and AMREP go up and down completely randomly.
Pair Corralation between Universal Technical and AMREP
Considering the 90-day investment horizon Universal Technical is expected to generate 1.11 times less return on investment than AMREP. But when comparing it to its historical volatility, Universal Technical Institute is 1.21 times less risky than AMREP. It trades about 0.13 of its potential returns per unit of risk. AMREP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,633 in AMREP on August 26, 2024 and sell it today you would earn a total of 2,087 from holding AMREP or generate 127.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Technical Institute vs. AMREP
Performance |
| Timeline |
| Universal Technical |
| AMREP |
Universal Technical and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Technical and AMREP
The main advantage of trading using opposite Universal Technical and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Technical position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.| Universal Technical vs. Laureate Education | Universal Technical vs. Strategic Education | Universal Technical vs. Grand Canyon Education | Universal Technical vs. American Public Education |
| AMREP vs. Landsea Homes Corp | AMREP vs. Forestar Group | AMREP vs. Five Point Holdings | AMREP vs. American Realty Investors |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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