Correlation Between Atlas Insurance and Universal Insurance

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

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

Diversification Opportunities for Atlas Insurance and Universal Insurance

-0.11

Correlation Coefficient

Atlas Insurance  Universal Insurance

Good diversification

The 3 months correlation between Atlas and Universal is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Insurance and Universal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Atlas 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 Atlas Insurance are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Atlas Insurance i.e., Atlas Insurance and Universal Insurance go up and down completely randomly.

Pair Corralation between Atlas Insurance and Universal Insurance

Assuming the 90 days trading horizon Atlas Insurance is expected to generate 1.03 times less return on investment than Universal Insurance. But when comparing it to its historical volatility, Atlas Insurance is 4.3 times less risky than Universal Insurance. It trades about 0.11 of its potential returns per unit of risk. Universal Insurance is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,050  in Universal Insurance on December 24, 2024 and sell it today you would lose (16.00) from holding Universal Insurance or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Atlas Insurance  vs.  Universal Insurance

Atlas Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atlas Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Universal Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Universal Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Atlas Insurance and Universal Insurance

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

The idea behind Atlas Insurance and Universal Insurance 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.