Correlation Between Universal Health and JPMorgan Japanese

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

By analyzing existing cross correlation between Universal Health Services and JPMorgan Japanese Investment, you can compare the effects of market volatilities on Universal Health and JPMorgan Japanese 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 Health with a short position of JPMorgan Japanese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and JPMorgan Japanese.

Diversification Opportunities for Universal Health and JPMorgan Japanese

-0.55

Correlation Coefficient

Universal Health  JPMorgan Japanese

Excellent diversification

The 3 months correlation between Universal and JPMorgan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and JPMorgan Japanese Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Japanese and Universal Health 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 Health Services are associated (or correlated) with JPMorgan Japanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Japanese has no effect on the direction of Universal Health i.e., Universal Health and JPMorgan Japanese go up and down completely randomly.

Pair Corralation between Universal Health and JPMorgan Japanese

Assuming the 90 days trading horizon Universal Health Services is expected to under-perform the JPMorgan Japanese. In addition to that, Universal Health is 1.98 times more volatile than JPMorgan Japanese Investment. It trades about -0.16 of its total potential returns per unit of risk. JPMorgan Japanese Investment is currently generating about 0.11 per unit of volatility. If you would invest  53,600  in JPMorgan Japanese Investment on September 14, 2024 and sell it today you would earn a total of  4,100  from holding JPMorgan Japanese Investment or generate 7.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Universal Health Services  vs.  JPMorgan Japanese Investment

Universal Health Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

JPMorgan Japanese

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Japanese Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, JPMorgan Japanese may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Universal Health and JPMorgan Japanese

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

The idea behind Universal Health Services and JPMorgan Japanese Investment 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.