Correlation Between Universal and ENERGY
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By analyzing existing cross correlation between Universal and ENERGY TRANSFER OPER, you can compare the effects of market volatilities on Universal and ENERGY 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 with a short position of ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and ENERGY.
Diversification Opportunities for Universal and ENERGY
Very good diversification
The 3 months correlation between Universal and ENERGY is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Universal and ENERGY TRANSFER OPER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGY TRANSFER OPER and Universal 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 are associated (or correlated) with ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGY TRANSFER OPER has no effect on the direction of Universal i.e., Universal and ENERGY go up and down completely randomly.
Pair Corralation between Universal and ENERGY
Considering the 90-day investment horizon Universal is expected to generate 3.55 times more return on investment than ENERGY. However, Universal is 3.55 times more volatile than ENERGY TRANSFER OPER. It trades about 0.01 of its potential returns per unit of risk. ENERGY TRANSFER OPER is currently generating about -0.02 per unit of risk. If you would invest 5,654 in Universal on September 4, 2024 and sell it today you would lose (60.00) from holding Universal or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.38% |
| Values | Daily Returns |
Universal vs. ENERGY TRANSFER OPER
Performance |
| Timeline |
| Universal |
| ENERGY TRANSFER OPER |
Universal and ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and ENERGY
The main advantage of trading using opposite Universal and ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal position performs unexpectedly, ENERGY 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 ENERGY will offset losses from the drop in ENERGY's long position.| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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