Correlation Between Universal Insurance and Keysight Technologies

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

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

Diversification Opportunities for Universal Insurance and Keysight Technologies

0.53

Correlation Coefficient

Universal Insurance  Keysight Technologies

Very weak diversification

The 3 months correlation between Universal and Keysight is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Universal Insurance 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 Insurance Holdings are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Universal Insurance i.e., Universal Insurance and Keysight Technologies go up and down completely randomly.

Pair Corralation between Universal Insurance and Keysight Technologies

Assuming the 90 days horizon Universal Insurance is expected to generate 1.92 times less return on investment than Keysight Technologies. In addition to that, Universal Insurance is 1.02 times more volatile than Keysight Technologies. It trades about 0.06 of its total potential returns per unit of risk. Keysight Technologies is currently generating about 0.12 per unit of volatility. If you would invest  12,350  in Keysight Technologies on April 24, 2025 and sell it today you would earn a total of  1,746  from holding Keysight Technologies or generate 14.14% return on investment over 90 days.

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

Universal Insurance Holdings  vs.  Keysight Technologies

Universal Insurance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Universal Insurance may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Keysight Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Keysight Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Insurance and Keysight Technologies

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

The idea behind Universal Insurance Holdings and Keysight Technologies 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.

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 the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.