Correlation Between Universal Technical and Adtalem Global

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

Diversification Opportunities for Universal Technical and Adtalem Global

0.89

Correlation Coefficient

Universal Technical  Adtalem Global

Very poor diversification

The 3 months correlation between Universal and Adtalem is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of Universal Technical i.e., Universal Technical and Adtalem Global go up and down completely randomly.

Pair Corralation between Universal Technical and Adtalem Global

Considering the 90-day investment horizon Universal Technical Institute is expected to generate 1.12 times more return on investment than Adtalem Global. However, Universal Technical is 1.12 times more volatile than Adtalem Global Education. It trades about 0.12 of its potential returns per unit of risk. Adtalem Global Education is currently generating about 0.09 per unit of risk. If you would invest  675.00  in Universal Technical Institute on September 19, 2024 and sell it today you would earn a total of  1,946  from holding Universal Technical Institute or generate 288.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Universal Technical Institute  vs.  Adtalem Global Education

Universal Technical

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 17 (%) 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.

Adtalem Global Education

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Adtalem Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Technical and Adtalem Global

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

The idea behind Universal Technical Institute and Adtalem Global 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.