Correlation Between Universal Technical and American Public

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

By analyzing existing cross correlation between Universal Technical Institute and American Public Education, you can compare the effects of market volatilities on Universal Technical and American Public 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 Technical with a short position of American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Technical and American Public.

Diversification Opportunities for Universal Technical and American Public

0.56

Correlation Coefficient

Universal Technical  American Public

Very weak diversification

The 3 months correlation between Universal and American is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education and Universal Technical 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 Technical Institute are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of Universal Technical i.e., Universal Technical and American Public go up and down completely randomly.

Pair Corralation between Universal Technical and American Public

Considering the 90-day investment horizon Universal Technical Institute is expected to generate 1.1 times more return on investment than American Public. However, Universal Technical is 1.1 times more volatile than American Public Education. It trades about 0.04 of its potential returns per unit of risk. American Public Education is currently generating about 0.02 per unit of risk. If you would invest  2,644  in Universal Technical Institute on December 1, 2024 and sell it today you would earn a total of  135.00  from holding Universal Technical Institute or generate 5.11% return on investment over 90 days.

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

Universal Technical Institute  vs.  American Public Education

Universal Technical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Universal Technical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

American Public Education

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, American Public is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Universal Technical and American Public

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

The idea behind Universal Technical Institute and American Public Education 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.