Correlation Between UNIVERSAL INSURANCE and INTERNATIONAL ENERGY

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

By analyzing existing cross correlation between UNIVERSAL INSURANCE PANY and INTERNATIONAL ENERGY INSURANCE, you can compare the effects of market volatilities on UNIVERSAL INSURANCE and INTERNATIONAL ENERGY 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 INTERNATIONAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL INSURANCE and INTERNATIONAL ENERGY.

Diversification Opportunities for UNIVERSAL INSURANCE and INTERNATIONAL ENERGY

0.7

Correlation Coefficient

UNIVERSAL INSURANCE  INTERNATIONAL ENERGY

Poor diversification

The 3 months correlation between UNIVERSAL and INTERNATIONAL is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL INSURANCE PANY and INTERNATIONAL ENERGY INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL ENERGY 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 PANY are associated (or correlated) with INTERNATIONAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL ENERGY has no effect on the direction of UNIVERSAL INSURANCE i.e., UNIVERSAL INSURANCE and INTERNATIONAL ENERGY go up and down completely randomly.

Pair Corralation between UNIVERSAL INSURANCE and INTERNATIONAL ENERGY

Assuming the 90 days trading horizon UNIVERSAL INSURANCE PANY is expected to generate 1.14 times more return on investment than INTERNATIONAL ENERGY. However, UNIVERSAL INSURANCE is 1.14 times more volatile than INTERNATIONAL ENERGY INSURANCE. It trades about 0.0 of its potential returns per unit of risk. INTERNATIONAL ENERGY INSURANCE is currently generating about -0.03 per unit of risk. If you would invest  37.00  in UNIVERSAL INSURANCE PANY on September 15, 2024 and sell it today you would lose (1.00) from holding UNIVERSAL INSURANCE PANY or give up 2.7% of portfolio value over 90 days.

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

UNIVERSAL INSURANCE PANY  vs.  INTERNATIONAL ENERGY INSURANCE

UNIVERSAL INSURANCE PANY

Risk-Adjusted Performance

0 of 100

Very Weak

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

INTERNATIONAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERNATIONAL ENERGY INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INTERNATIONAL ENERGY is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UNIVERSAL INSURANCE and INTERNATIONAL ENERGY

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

The idea behind UNIVERSAL INSURANCE PANY and INTERNATIONAL ENERGY INSURANCE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.