Correlation Between Universal Insurance and Peoples Insurance
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Peoples 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 Universal Insurance and Peoples Insurance 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 The Peoples Insurance, you can compare the effects of market volatilities on Universal Insurance and Peoples 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 Universal Insurance with a short position of Peoples Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Peoples Insurance.
Diversification Opportunities for Universal Insurance and Peoples Insurance
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Peoples is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and The Peoples Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance 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 Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance has no effect on the direction of Universal Insurance i.e., Universal Insurance and Peoples Insurance go up and down completely randomly.
Pair Corralation between Universal Insurance and Peoples Insurance
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the Peoples Insurance. In addition to that, Universal Insurance is 1.31 times more volatile than The Peoples Insurance. It trades about -0.1 of its total potential returns per unit of risk. The Peoples Insurance is currently generating about 0.01 per unit of volatility. If you would invest 62.00 in The Peoples Insurance on April 22, 2025 and sell it today you would earn a total of 0.00 from holding The Peoples Insurance or generate 0.0% 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. The Peoples Insurance
Performance |
Timeline |
Universal Insurance |
Peoples Insurance |
Universal Insurance and Peoples Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Universal Insurance and Peoples Insurance
The main advantage of trading using opposite Universal Insurance and Peoples Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Peoples 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 Peoples Insurance will offset losses from the drop in Peoples Insurance's long position.Universal Insurance vs. Lattice Semiconductor | Universal Insurance vs. Semiconductor Manufacturing International | Universal Insurance vs. Salesforce | Universal Insurance vs. Gruppo Mutuionline SpA |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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