Correlation Between Pyxus International and Universal

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

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

Diversification Opportunities for Pyxus International and Universal

-0.33

Correlation Coefficient

Pyxus International  Universal

Very good diversification

The 3 months correlation between Pyxus and Universal is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pyxus International and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal and Pyxus International 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 Pyxus International are associated (or correlated) with Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Pyxus International i.e., Pyxus International and Universal go up and down completely randomly.

Pair Corralation between Pyxus International and Universal

Given the investment horizon of 90 days Pyxus International is expected to generate 2.67 times less return on investment than Universal. In addition to that, Pyxus International is 7.72 times more volatile than Universal. It trades about 0.0 of its total potential returns per unit of risk. Universal is currently generating about 0.07 per unit of volatility. If you would invest  5,174  in Universal on September 22, 2024 and sell it today you would earn a total of  289.00  from holding Universal or generate 5.59% return on investment over 90 days.

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

Pyxus International  vs.  Universal

Pyxus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyxus International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Pyxus International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Universal

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pyxus International and Universal

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

The idea behind Pyxus International and Universal 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.