Correlation Between Universal Insurance and Life Insurance
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Life 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 Universal Insurance and Life Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and Life Insurance, you can compare the effects of market volatilities on Universal Insurance and Life 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 Universal Insurance with a short position of Life Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Life Insurance.
Diversification Opportunities for Universal Insurance and Life Insurance
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Universal and Life is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and Universal Insurance 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 Insurance Holdings are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Universal Insurance i.e., Universal Insurance and Life Insurance go up and down completely randomly.
Pair Corralation between Universal Insurance and Life Insurance
If you would invest 1,550 in Life Insurance on October 12, 2024 and sell it today you would earn a total of 0.00 from holding Life Insurance or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Life Insurance
Performance |
| Timeline |
| Universal Insurance |
| Life Insurance |
Universal Insurance and Life Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Life Insurance
The main advantage of trading using opposite Universal Insurance and Life Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Life 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 Life Insurance will offset losses from the drop in Life Insurance's long position.| Universal Insurance vs. HCI Group | Universal Insurance vs. Kingstone Companies | Universal Insurance vs. Horace Mann Educators | Universal Insurance vs. Heritage Insurance Hldgs |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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