Correlation Between Universal Logis and Northwest Bancshares

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Can any of the company-specific risk be diversified away by investing in both Universal Logis and Northwest Bancshares 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 Logis and Northwest Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Logis Holdings and Northwest Bancshares, you can compare the effects of market volatilities on Universal Logis and Northwest Bancshares 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 Logis with a short position of Northwest Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Logis and Northwest Bancshares.

Diversification Opportunities for Universal Logis and Northwest Bancshares

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Universal and Northwest is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Universal Logis Holdings and Northwest Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Bancshares and Universal Logis 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 Logis Holdings are associated (or correlated) with Northwest Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Bancshares has no effect on the direction of Universal Logis i.e., Universal Logis and Northwest Bancshares go up and down completely randomly.

Pair Corralation between Universal Logis and Northwest Bancshares

Considering the 90-day investment horizon Universal Logis Holdings is expected to generate 1.48 times more return on investment than Northwest Bancshares. However, Universal Logis is 1.48 times more volatile than Northwest Bancshares. It trades about 0.05 of its potential returns per unit of risk. Northwest Bancshares is currently generating about 0.05 per unit of risk. If you would invest  2,222  in Universal Logis Holdings on July 8, 2022 and sell it today you would earn a total of  1,123  from holding Universal Logis Holdings or generate 50.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Universal Logis Holdings  vs.  Northwest Bancshares

 Performance (%) 
       Timeline  
Universal Logis Holdings 
Universal Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Universal Logis Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Universal Logis reported solid returns over the last few months and may actually be approaching a breakup point.

Universal Price Channel

Northwest Bancshares 
Northwest Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Northwest Bancshares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental drivers, Northwest Bancshares may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Northwest Price Channel

Universal Logis and Northwest Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Universal Logis and Northwest Bancshares

The main advantage of trading using opposite Universal Logis and Northwest Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Logis position performs unexpectedly, Northwest Bancshares 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 Northwest Bancshares will offset losses from the drop in Northwest Bancshares' long position.
Universal Logis vs. Amazon Inc
The idea behind Universal Logis Holdings and Northwest Bancshares 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.
Northwest Bancshares 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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