Correlation Between Universal Technical and Ark Restaurants

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

Diversification Opportunities for Universal Technical and Ark Restaurants

0.37

Correlation Coefficient

Universal Technical  Ark Restaurants

Weak diversification

The 3 months correlation between Universal and Ark is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp 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 Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Universal Technical i.e., Universal Technical and Ark Restaurants go up and down completely randomly.

Pair Corralation between Universal Technical and Ark Restaurants

Considering the 90-day investment horizon Universal Technical Institute is expected to generate 0.91 times more return on investment than Ark Restaurants. However, Universal Technical Institute is 1.1 times less risky than Ark Restaurants. It trades about 0.11 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about 0.0 per unit of risk. If you would invest  758.00  in Universal Technical Institute on October 22, 2024 and sell it today you would earn a total of  1,900  from holding Universal Technical Institute or generate 250.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.59%
Values	Daily Returns

Universal Technical Institute  vs.  Ark Restaurants Corp

Universal Technical

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Universal Technical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ark Restaurants Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Technical and Ark Restaurants

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

The idea behind Universal Technical Institute and Ark Restaurants Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.