Correlation Between Sealed Air and Universal Health
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Universal Health 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 Sealed Air and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air Corp and Universal Health Services, you can compare the effects of market volatilities on Sealed Air and Universal Health 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 Sealed Air with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Universal Health.
Diversification Opportunities for Sealed Air and Universal Health
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sealed and Universal is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and Sealed Air 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 Sealed Air Corp are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Sealed Air i.e., Sealed Air and Universal Health go up and down completely randomly.
Pair Corralation between Sealed Air and Universal Health
Assuming the 90 days trading horizon Sealed Air Corp is expected to generate 0.62 times more return on investment than Universal Health. However, Sealed Air Corp is 1.61 times less risky than Universal Health. It trades about -0.03 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.2 per unit of risk. If you would invest 3,524 in Sealed Air Corp on September 24, 2024 and sell it today you would lose (108.00) from holding Sealed Air Corp or give up 3.06% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.31% |
Values | Daily Returns |
Sealed Air Corp vs. Universal Health Services
Performance |
Timeline |
Sealed Air Corp |
Universal Health Services |
Sealed Air and Universal Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sealed Air and Universal Health
The main advantage of trading using opposite Sealed Air and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.Sealed Air vs. Uniper SE | Sealed Air vs. Mulberry Group PLC | Sealed Air vs. London Security Plc | Sealed Air vs. Triad Group PLC |
Universal Health vs. Uniper SE | Universal Health vs. Mulberry Group PLC | Universal Health vs. London Security Plc | Universal Health vs. Triad Group PLC |
Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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