Correlation Between MUTUIONLINE and Universal Insurance

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

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

Diversification Opportunities for MUTUIONLINE and Universal Insurance

0.8

Correlation Coefficient

MUTUIONLINE  Universal Insurance

Very poor diversification

The 3 months correlation between MUTUIONLINE and Universal is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MUTUIONLINE and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and MUTUIONLINE 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 MUTUIONLINE 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 MUTUIONLINE i.e., MUTUIONLINE and Universal Insurance go up and down completely randomly.

Pair Corralation between MUTUIONLINE and Universal Insurance

Assuming the 90 days trading horizon MUTUIONLINE is expected to generate 1.25 times more return on investment than Universal Insurance. However, MUTUIONLINE is 1.25 times more volatile than Universal Insurance Holdings. It trades about 0.1 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.05 per unit of risk. If you would invest  3,929  in MUTUIONLINE on April 23, 2025 and sell it today you would earn a total of  561.00  from holding MUTUIONLINE or generate 14.28% return on investment over 90 days.

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

MUTUIONLINE  vs.  Universal Insurance Holdings

MUTUIONLINE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MUTUIONLINE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, MUTUIONLINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 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 MUTUIONLINE and Universal Insurance

The main advantage of trading using opposite MUTUIONLINE and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MUTUIONLINE 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 MUTUIONLINE 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.