Correlation Between Universal Technical and Pinterest

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

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

Diversification Opportunities for Universal Technical and Pinterest

-0.33

Correlation Coefficient

Universal Technical  Pinterest

Very good diversification

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

Pair Corralation between Universal Technical and Pinterest

Considering the 90-day investment horizon Universal Technical Institute is expected to generate 1.34 times more return on investment than Pinterest. However, Universal Technical is 1.34 times more volatile than Pinterest. It trades about 0.23 of its potential returns per unit of risk. Pinterest is currently generating about 0.03 per unit of risk. If you would invest  1,664  in Universal Technical Institute on September 17, 2024 and sell it today you would earn a total of  986.00  from holding Universal Technical Institute or generate 59.25% return on investment over 90 days.

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

Universal Technical Institute  vs.  Pinterest

Universal Technical

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Universal Technical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pinterest

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Universal Technical and Pinterest

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

The idea behind Universal Technical Institute and Pinterest 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.