Correlation Between FORWARD AIR and Universal Entertainment

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

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

Diversification Opportunities for FORWARD AIR and Universal Entertainment

0.31

Correlation Coefficient

FORWARD AIR  Universal Entertainment

Weak diversification

The 3 months correlation between FORWARD and Universal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Universal Entertainment go up and down completely randomly.

Pair Corralation between FORWARD AIR and Universal Entertainment

Assuming the 90 days horizon FORWARD AIR P is expected to generate 1.21 times more return on investment than Universal Entertainment. However, FORWARD AIR is 1.21 times more volatile than Universal Entertainment. It trades about 0.07 of its potential returns per unit of risk. Universal Entertainment is currently generating about -0.1 per unit of risk. If you would invest  2,780  in FORWARD AIR P on October 6, 2024 and sell it today you would earn a total of  280.00  from holding FORWARD AIR P or generate 10.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

FORWARD AIR P  vs.  Universal Entertainment

FORWARD AIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FORWARD AIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Universal Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with FORWARD AIR and Universal Entertainment

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

The idea behind FORWARD AIR P and Universal Entertainment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.