Correlation Between Universal Insurance and JS Global

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

By analyzing existing cross correlation between Universal Insurance and JS Global Banking, you can compare the effects of market volatilities on Universal Insurance and JS 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 Insurance with a short position of JS Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and JS Global.

Diversification Opportunities for Universal Insurance and JS Global

-0.13

Correlation Coefficient

Universal Insurance  JS Global

Good diversification

The 3 months correlation between Universal and JSGBETF is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance and JS Global Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Global Banking and Universal Insurance 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 Insurance are associated (or correlated) with JS Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Global Banking has no effect on the direction of Universal Insurance i.e., Universal Insurance and JS Global go up and down completely randomly.

Pair Corralation between Universal Insurance and JS Global

Assuming the 90 days trading horizon Universal Insurance is expected to generate 2.12 times more return on investment than JS Global. However, Universal Insurance is 2.12 times more volatile than JS Global Banking. It trades about -0.01 of its potential returns per unit of risk. JS Global Banking is currently generating about -0.05 per unit of risk. If you would invest  1,185  in Universal Insurance on December 27, 2024 and sell it today you would lose (155.00) from holding Universal Insurance or give up 13.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Universal Insurance  vs.  JS Global Banking

Universal Insurance

Risk-Adjusted Performance

Weak

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

JS Global Banking

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Global Banking has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Universal Insurance and JS Global

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

The idea behind Universal Insurance and JS Global Banking 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.