Correlation Between Universal Technical and SIMON

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

Diversification Opportunities for Universal Technical and SIMON

-0.29

Correlation Coefficient

Universal Technical  SIMON

Very good diversification

The 3 months correlation between Universal and SIMON is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP 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 SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Universal Technical i.e., Universal Technical and SIMON go up and down completely randomly.

Pair Corralation between Universal Technical and SIMON

Considering the 90-day investment horizon Universal Technical is expected to generate 9.91 times less return on investment than SIMON. In addition to that, Universal Technical is 5.78 times more volatile than SIMON PPTY GROUP. It trades about 0.0 of its total potential returns per unit of risk. SIMON PPTY GROUP is currently generating about 0.21 per unit of volatility. If you would invest  9,006  in SIMON PPTY GROUP on December 5, 2024 and sell it today you would earn a total of  189.00  from holding SIMON PPTY GROUP or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Universal Technical Institute  vs.  SIMON PPTY GROUP

Universal Technical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 4 (%) 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.

SIMON PPTY GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal Technical and SIMON

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

The idea behind Universal Technical Institute and SIMON PPTY GROUP 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.