Correlation Between Universal Health and Continental

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

Diversification Opportunities for Universal Health and Continental

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Universal and Continental is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Universal Health i.e., Universal Health and Continental go up and down completely randomly.

Pair Corralation between Universal Health and Continental

Considering the 90-day investment horizon Universal Health Services is expected to under-perform the Continental. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Services is 2.01 times less risky than Continental. The stock trades about -0.01 of its potential returns per unit of risk. The Caleres is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  989.00  in Caleres on July 1, 2022 and sell it today you would earn a total of  1,457  from holding Caleres or generate 147.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Universal Health Services  vs.  Caleres

 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 conflicting performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Universal Price Channel

Continental 
Continental Performance
0 of 100
Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Continental is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Continental Price Channel

Universal Health and Continental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Universal Health and Continental

The main advantage of trading using opposite Universal Health and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.
Universal Health vs. Amazon Inc
The idea behind Universal Health Services and Caleres 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.
Continental 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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