Correlation Between Universal Health and PEAK Old

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

By analyzing existing cross correlation between Universal Health Realty and PEAK Old, you can compare the effects of market volatilities on Universal Health and PEAK Old 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 PEAK Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and PEAK Old.

Diversification Opportunities for Universal Health and PEAK Old

0.12

Correlation Coefficient

Universal Health  PEAK Old

Average diversification

The 3 months correlation between Universal and PEAK is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and PEAK Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEAK Old 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 Realty are associated (or correlated) with PEAK Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEAK Old has no effect on the direction of Universal Health i.e., Universal Health and PEAK Old go up and down completely randomly.

Pair Corralation between Universal Health and PEAK Old

If you would invest  2,212  in PEAK Old on August 31, 2024 and sell it today you would earn a total of  0.00  from holding PEAK Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Universal Health Realty  vs.  PEAK Old

Universal Health Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Universal Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

PEAK Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEAK Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, PEAK Old is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Universal Health and PEAK Old

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

The idea behind Universal Health Realty and PEAK Old 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.