Correlation Between Dave Busters and Universal Technical

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

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

Diversification Opportunities for Dave Busters and Universal Technical

-0.4

Correlation Coefficient

Dave Busters  Universal Technical

Very good diversification

The 3 months correlation between Dave and Universal is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Universal Technical Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Technical and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Universal Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Technical has no effect on the direction of Dave Busters i.e., Dave Busters and Universal Technical go up and down completely randomly.

Pair Corralation between Dave Busters and Universal Technical

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Universal Technical. In addition to that, Dave Busters is 3.32 times more volatile than Universal Technical Institute. It trades about -0.08 of its total potential returns per unit of risk. Universal Technical Institute is currently generating about 0.06 per unit of volatility. If you would invest  2,565  in Universal Technical Institute on October 8, 2024 and sell it today you would earn a total of  55.00  from holding Universal Technical Institute or generate 2.14% return on investment over 90 days.

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

Dave Busters Entertainment  vs.  Universal Technical Institute

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

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

Universal Technical

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Universal Technical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and Universal Technical

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

The idea behind Dave Busters Entertainment and Universal Technical Institute 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.