Correlation Between Universal Health and Douglas Elliman

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

By analyzing existing cross correlation between Universal Health Realty and Douglas Elliman, you can compare the effects of market volatilities on Universal Health and Douglas Elliman 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 Douglas Elliman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Douglas Elliman.

Diversification Opportunities for Universal Health and Douglas Elliman

-0.12

Correlation Coefficient

Universal Health  Douglas Elliman

Good diversification

The 3 months correlation between Universal and Douglas is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and Douglas Elliman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Elliman 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 Realty are associated (or correlated) with Douglas Elliman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Elliman has no effect on the direction of Universal Health i.e., Universal Health and Douglas Elliman go up and down completely randomly.

Pair Corralation between Universal Health and Douglas Elliman

Considering the 90-day investment horizon Universal Health Realty is expected to generate 0.33 times more return on investment than Douglas Elliman. However, Universal Health Realty is 3.07 times less risky than Douglas Elliman. It trades about -0.03 of its potential returns per unit of risk. Douglas Elliman is currently generating about -0.02 per unit of risk. If you would invest  5,005  in Universal Health Realty on September 25, 2024 and sell it today you would lose (1,321) from holding Universal Health Realty or give up 26.39% of portfolio value over 90 days.

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

Universal Health Realty  vs.  Douglas Elliman

Universal Health Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Douglas Elliman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Douglas Elliman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

Pair Trading with Universal Health and Douglas Elliman

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

The idea behind Universal Health Realty and Douglas Elliman 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 Transaction History module to view history of all your transactions and understand their impact on performance.