Correlation Between Universal Insurance and Atlas Insurance
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Atlas 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 Atlas Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance and Atlas Insurance, you can compare the effects of market volatilities on Universal Insurance and Atlas 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 Atlas Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Atlas Insurance.
Diversification Opportunities for Universal Insurance and Atlas Insurance
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and Atlas is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance and Atlas Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas 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 are associated (or correlated) with Atlas Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Insurance has no effect on the direction of Universal Insurance i.e., Universal Insurance and Atlas Insurance go up and down completely randomly.
Pair Corralation between Universal Insurance and Atlas Insurance
Assuming the 90 days trading horizon Universal Insurance is expected to generate 3.0 times more return on investment than Atlas Insurance. However, Universal Insurance is 3.0 times more volatile than Atlas Insurance. It trades about 0.14 of its potential returns per unit of risk. Atlas Insurance is currently generating about 0.0 per unit of risk. If you would invest 1,035 in Universal Insurance on November 7, 2024 and sell it today you would earn a total of 133.00 from holding Universal Insurance or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance vs. Atlas Insurance
Performance |
| Timeline |
| Universal Insurance |
| Atlas Insurance |
Universal Insurance and Atlas Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Atlas Insurance
The main advantage of trading using opposite Universal Insurance and Atlas Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Atlas 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 Atlas Insurance will offset losses from the drop in Atlas Insurance's long position.| Universal Insurance vs. United Insurance | Universal Insurance vs. Grays Leasing | Universal Insurance vs. EFU General Insurance | Universal Insurance vs. Engro Polymer Chemicals |
| Atlas Insurance vs. Masood Textile Mills | Atlas Insurance vs. Fauji Foods | Atlas Insurance vs. KSB Pumps | Atlas Insurance vs. Mari Petroleum |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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