Correlation Between Universal Health and Marcus Millichap

Can any of the company-specific risk be diversified away by investing in both Universal Health and Marcus Millichap 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 Marcus Millichap 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 Marcus Millichap, you can compare the effects of market volatilities on Universal Health and Marcus Millichap 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 Marcus Millichap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Marcus Millichap.

Diversification Opportunities for Universal Health and Marcus Millichap

0.3

Correlation Coefficient

Universal Health  Marcus Millichap

Weak diversification

The 3 months correlation between Universal and Marcus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and Marcus Millichap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus Millichap 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 Marcus Millichap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus Millichap has no effect on the direction of Universal Health i.e., Universal Health and Marcus Millichap go up and down completely randomly.

Pair Corralation between Universal Health and Marcus Millichap

Considering the 90-day investment horizon Universal Health Realty is expected to under-perform the Marcus Millichap. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Realty is 1.17 times less risky than Marcus Millichap. The stock trades about -0.16 of its potential returns per unit of risk. The Marcus Millichap is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,684  in Marcus Millichap on October 13, 2024 and sell it today you would lose (290.00) from holding Marcus Millichap or give up 7.87% of portfolio value over 90 days.

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

Universal Health Realty  vs.  Marcus Millichap

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 weak performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Marcus Millichap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marcus Millichap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Universal Health and Marcus Millichap

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

The idea behind Universal Health Realty and Marcus Millichap 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.