Correlation Between Universal Health and Huntington Ingalls

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Can any of the company-specific risk be diversified away by investing in both Universal Health and Huntington Ingalls 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 Huntington Ingalls 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 Huntington Ingalls Industries, you can compare the effects of market volatilities on Universal Health and Huntington Ingalls 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 Huntington Ingalls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Huntington Ingalls.

Diversification Opportunities for Universal Health and Huntington Ingalls

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Universal and Huntington is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls 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 Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of Universal Health i.e., Universal Health and Huntington Ingalls go up and down completely randomly.

Pair Corralation between Universal Health and Huntington Ingalls

Considering the 90-day investment horizon Universal Health Services is expected to under-perform the Huntington Ingalls. In addition to that, Universal Health is 1.29 times more volatile than Huntington Ingalls Industries. It trades about -0.01 of its total potential returns per unit of risk. Huntington Ingalls Industries is currently generating about 0.07 per unit of volatility. If you would invest  14,121  in Huntington Ingalls Industries on July 8, 2022 and sell it today you would earn a total of  9,061  from holding Huntington Ingalls Industries or generate 64.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Universal Health Services  vs.  Huntington Ingalls Industries

 Performance (%) 
       Timeline  
Universal Health Services 
Universal Performance
0 of 100
Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Universal Price Channel

Huntington Ingalls 
Huntington Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Ingalls Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward indicators, Huntington Ingalls may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Huntington Price Channel

Universal Health and Huntington Ingalls Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Universal Health and Huntington Ingalls

The main advantage of trading using opposite Universal Health and Huntington Ingalls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Huntington Ingalls 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 Huntington Ingalls will offset losses from the drop in Huntington Ingalls' long position.
Universal Health vs. Amazon Inc
The idea behind Universal Health Services and Huntington Ingalls Industries 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.
Huntington Ingalls vs. Amazon Inc
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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