Correlation Between SOGECLAIR and Universal Insurance

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

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

Diversification Opportunities for SOGECLAIR and Universal Insurance

0.07

Correlation Coefficient

SOGECLAIR  Universal Insurance

Significant diversification

The 3 months correlation between SOGECLAIR and Universal is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SOGECLAIR SA INH and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and SOGECLAIR 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 SOGECLAIR SA INH are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of SOGECLAIR i.e., SOGECLAIR and Universal Insurance go up and down completely randomly.

Pair Corralation between SOGECLAIR and Universal Insurance

Assuming the 90 days horizon SOGECLAIR SA INH is expected to generate 1.69 times more return on investment than Universal Insurance. However, SOGECLAIR is 1.69 times more volatile than Universal Insurance Holdings. It trades about 0.21 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.09 per unit of risk. If you would invest  1,937  in SOGECLAIR SA INH on April 20, 2025 and sell it today you would earn a total of  1,003  from holding SOGECLAIR SA INH or generate 51.78% return on investment over 90 days.

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

SOGECLAIR SA INH  vs.  Universal Insurance Holdings

SOGECLAIR SA INH

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOGECLAIR SA INH are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, SOGECLAIR reported solid returns over the last few months and may actually be approaching a breakup point.

Universal Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Universal Insurance may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SOGECLAIR and Universal Insurance

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

The idea behind SOGECLAIR SA INH and Universal Insurance Holdings 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.