Correlation Between Unum and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Unum and Universal Insurance 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 Unum and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unum Group and Universal Insurance Holdings, you can compare the effects of market volatilities on Unum and Universal Insurance 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 Unum with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unum and Universal Insurance.
Diversification Opportunities for Unum and Universal Insurance
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unum and Universal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Unum Group and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Unum 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 Unum Group are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Unum i.e., Unum and Universal Insurance go up and down completely randomly.
Pair Corralation between Unum and Universal Insurance
Considering the 90-day investment horizon Unum Group is expected to generate 0.47 times more return on investment than Universal Insurance. However, Unum Group is 2.13 times less risky than Universal Insurance. It trades about 0.23 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about -0.23 per unit of risk. If you would invest 7,278 in Unum Group on October 23, 2024 and sell it today you would earn a total of 220.00 from holding Unum Group or generate 3.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Unum Group vs. Universal Insurance Holdings
Performance |
Timeline |
Unum Group |
Universal Insurance |
Unum and Universal Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Unum and Universal Insurance
The main advantage of trading using opposite Unum and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unum position performs unexpectedly, Universal Insurance 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 Insurance will offset losses from the drop in Universal Insurance's long position.Unum vs. Prudential Financial | Unum vs. MetLife | Unum vs. Jackson Financial | Unum vs. Manulife Financial Corp |
Universal Insurance vs. HCI Group | Universal Insurance vs. Kingstone Companies | Universal Insurance vs. Horace Mann Educators | Universal Insurance vs. Heritage Insurance Hldgs |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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