Correlation Between Universal Technical and Neogen

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

Diversification Opportunities for Universal Technical and Neogen

-0.47

Correlation Coefficient

Universal Technical  Neogen

Very good diversification

The 3 months correlation between Universal and Neogen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen 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 Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of Universal Technical i.e., Universal Technical and Neogen go up and down completely randomly.

Pair Corralation between Universal Technical and Neogen

Considering the 90-day investment horizon Universal Technical Institute is expected to generate 1.1 times more return on investment than Neogen. However, Universal Technical is 1.1 times more volatile than Neogen. It trades about 0.03 of its potential returns per unit of risk. Neogen is currently generating about -0.23 per unit of risk. If you would invest  2,587  in Universal Technical Institute on December 28, 2024 and sell it today you would earn a total of  63.00  from holding Universal Technical Institute or generate 2.44% return on investment over 90 days.

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

Universal Technical Institute  vs.  Neogen

Universal Technical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Universal Technical is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Neogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Universal Technical and Neogen

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

The idea behind Universal Technical Institute and Neogen 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.