Correlation Between Universal Health and Manitowoc

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

Diversification Opportunities for Universal Health and Manitowoc

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Universal and Manitowoc is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc 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 Manitowoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitowoc has no effect on the direction of Universal Health i.e., Universal Health and Manitowoc go up and down completely randomly.

Pair Corralation between Universal Health and Manitowoc

Considering the 90-day investment horizon Universal Health Services is expected to under-perform the Manitowoc. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Services is 1.67 times less risky than Manitowoc. The stock trades about -0.01 of its potential returns per unit of risk. The Manitowoc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  919.00  in Manitowoc on June 26, 2022 and sell it today you would lose (86.00)  from holding Manitowoc or give up 9.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Universal Health Services  vs.  Manitowoc

 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 unsteady 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

Manitowoc 
Manitowoc Performance
0 of 100
Over the last 90 days Manitowoc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in October 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Manitowoc Price Channel

Universal Health and Manitowoc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Universal Health and Manitowoc

The main advantage of trading using opposite Universal Health and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Manitowoc 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 Manitowoc will offset losses from the drop in Manitowoc's long position.
Universal Health vs. BUSHVELD MINERALS LTD
The idea behind Universal Health Services and Manitowoc 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.
Manitowoc vs. BUSHVELD MINERALS LTD
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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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