Correlation Between Getty Realty and Universal Insurance

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

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

Diversification Opportunities for Getty Realty and Universal Insurance

0.46

Correlation Coefficient

Getty Realty  Universal Insurance

Very weak diversification

The 3 months correlation between Getty and Universal is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Getty Realty 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 Getty Realty 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 Getty Realty i.e., Getty Realty and Universal Insurance go up and down completely randomly.

Pair Corralation between Getty Realty and Universal Insurance

Considering the 90-day investment horizon Getty Realty is expected to generate 0.86 times more return on investment than Universal Insurance. However, Getty Realty is 1.17 times less risky than Universal Insurance. It trades about -0.12 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about -0.16 per unit of risk. If you would invest  3,150  in Getty Realty on October 9, 2024 and sell it today you would lose (186.00) from holding Getty Realty or give up 5.9% of portfolio value over 90 days.

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

Getty Realty  vs.  Universal Insurance Holdings

Getty Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getty Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Getty Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Universal Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Universal Insurance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Getty Realty and Universal Insurance

The main advantage of trading using opposite Getty Realty and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Realty 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 Getty Realty and Universal Insurance Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.