Correlation Between TAAT Global and Universal

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

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

Diversification Opportunities for TAAT Global and Universal

-0.65

Correlation Coefficient

TAAT Global  Universal

Excellent diversification

The 3 months correlation between TAAT and Universal is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding TAAT Global Alternatives and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal and TAAT Global 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 TAAT Global Alternatives are associated (or correlated) with Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of TAAT Global i.e., TAAT Global and Universal go up and down completely randomly.

Pair Corralation between TAAT Global and Universal

Assuming the 90 days horizon TAAT Global Alternatives is expected to generate 7.47 times more return on investment than Universal. However, TAAT Global is 7.47 times more volatile than Universal. It trades about 0.01 of its potential returns per unit of risk. Universal is currently generating about -0.17 per unit of risk. If you would invest  15.00  in TAAT Global Alternatives on September 23, 2024 and sell it today you would lose (1.00) from holding TAAT Global Alternatives or give up 6.67% of portfolio value over 90 days.

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

TAAT Global Alternatives  vs.  Universal

TAAT Global Alternatives

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TAAT Global Alternatives are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, TAAT Global reported solid returns over the last few months and may actually be approaching a breakup point.

Universal

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with TAAT Global and Universal

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

The idea behind TAAT Global Alternatives and Universal 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.