Correlation Between Universal Health and SilverCrest Metals

Can any of the company-specific risk be diversified away by investing in both Universal Health and SilverCrest Metals 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 Health and SilverCrest Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Health Services and SilverCrest Metals, you can compare the effects of market volatilities on Universal Health and SilverCrest Metals 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 Health with a short position of SilverCrest Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and SilverCrest Metals.

Diversification Opportunities for Universal Health and SilverCrest Metals

-0.57

Correlation Coefficient

Universal Health  SilverCrest Metals

Excellent diversification

The 3 months correlation between Universal and SilverCrest is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals and Universal Health 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 Health Services are associated (or correlated) with SilverCrest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverCrest Metals has no effect on the direction of Universal Health i.e., Universal Health and SilverCrest Metals go up and down completely randomly.

Pair Corralation between Universal Health and SilverCrest Metals

Assuming the 90 days trading horizon Universal Health is expected to generate 4.63 times less return on investment than SilverCrest Metals. But when comparing it to its historical volatility, Universal Health Services is 2.65 times less risky than SilverCrest Metals. It trades about 0.04 of its potential returns per unit of risk. SilverCrest Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  893.00  in SilverCrest Metals on October 11, 2024 and sell it today you would earn a total of  511.00  from holding SilverCrest Metals or generate 57.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	46.76%
Values	Daily Returns

Universal Health Services  vs.  SilverCrest Metals

Universal Health Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SilverCrest Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverCrest Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SilverCrest Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Universal Health and SilverCrest Metals

The main advantage of trading using opposite Universal Health and SilverCrest Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, SilverCrest Metals 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 SilverCrest Metals will offset losses from the drop in SilverCrest Metals' long position.

The idea behind Universal Health Services and SilverCrest Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.