Correlation Between United Homes and Universal Technical

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

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

Diversification Opportunities for United Homes and Universal Technical

-0.51

Correlation Coefficient

United Homes  Universal Technical

Excellent diversification

The 3 months correlation between United and Universal is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Universal Technical Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Technical and United Homes 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 United Homes Group 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 United Homes i.e., United Homes and Universal Technical go up and down completely randomly.

Pair Corralation between United Homes and Universal Technical

Considering the 90-day investment horizon United Homes is expected to generate 17.59 times less return on investment than Universal Technical. In addition to that, United Homes is 2.52 times more volatile than Universal Technical Institute. It trades about 0.0 of its total potential returns per unit of risk. Universal Technical Institute is currently generating about 0.11 per unit of volatility. If you would invest  702.00  in Universal Technical Institute on October 4, 2024 and sell it today you would earn a total of  1,869  from holding Universal Technical Institute or generate 266.24% return on investment over 90 days.

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

United Homes Group  vs.  Universal Technical Institute

United Homes Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Homes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 United Homes and Universal Technical

The main advantage of trading using opposite United Homes and Universal Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes 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 United Homes Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.