Correlation Between Universal Insurance and W R
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and W R 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 W R 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 W R Berkley, you can compare the effects of market volatilities on Universal Insurance and W R 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 W R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and W R.
Diversification Opportunities for Universal Insurance and W R
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and WRB is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley 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 W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of Universal Insurance i.e., Universal Insurance and W R go up and down completely randomly.
Pair Corralation between Universal Insurance and W R
Considering the 90-day investment horizon Universal Insurance Holdings is expected to under-perform the W R. In addition to that, Universal Insurance is 1.09 times more volatile than W R Berkley. It trades about -0.16 of its total potential returns per unit of risk. W R Berkley is currently generating about 0.08 per unit of volatility. If you would invest 5,965 in W R Berkley on September 15, 2024 and sell it today you would earn a total of 111.00 from holding W R Berkley or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. W R Berkley
Performance |
| Timeline |
| Universal Insurance |
| W R Berkley |
Universal Insurance and W R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and W R
The main advantage of trading using opposite Universal Insurance and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, W R 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 W R will offset losses from the drop in W R's long position.| Universal Insurance vs. W R Berkley | Universal Insurance vs. Markel | Universal Insurance vs. RLI Corp | Universal Insurance vs. CNA Financial |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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