Correlation Between Universal Health and BROADWIND ENRGY
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Universal Health Services vs. BROADWIND ENRGY
Performance |
Timeline |
Universal Health Services |
BROADWIND ENRGY |
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.Universal Health vs. Goodyear Tire Rubber | Universal Health vs. GigaMedia | Universal Health vs. Live Nation Entertainment | Universal Health vs. NEWELL RUBBERMAID |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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