Correlation Between Universal Health and BROADWIND ENRGY

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Can any of the company-specific risk be diversified away by investing in both Universal Health and BROADWIND ENRGY 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 Universal Health and BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services and BROADWIND ENRGY, you can compare the effects of market volatilities on Universal Health and BROADWIND ENRGY 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 Universal Health with a short position of BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and BROADWIND ENRGY.

Diversification Opportunities for Universal Health and BROADWIND ENRGY

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Universal and BROADWIND is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY and Universal Health 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 Universal Health Services are associated (or correlated) with BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of Universal Health i.e., Universal Health and BROADWIND ENRGY go up and down completely randomly.

Pair Corralation between Universal Health and BROADWIND ENRGY

Assuming the 90 days horizon Universal Health Services is expected to generate 0.39 times more return on investment than BROADWIND ENRGY. However, Universal Health Services is 2.53 times less risky than BROADWIND ENRGY. It trades about 0.04 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.02 per unit of risk. If you would invest  13,281  in Universal Health Services on October 10, 2024 and sell it today you would earn a total of  4,019  from holding Universal Health Services or generate 30.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Universal Health Services  vs.  BROADWIND ENRGY

 Performance 
       Timeline  
Universal Health Services 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
BROADWIND ENRGY 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in BROADWIND ENRGY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, BROADWIND ENRGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Universal Health and BROADWIND ENRGY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Universal Health and BROADWIND ENRGY

The main advantage of trading using opposite Universal Health and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.
The idea behind Universal Health Services and BROADWIND ENRGY 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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