Correlation Between Urstadt Biddle and Universal Insurance

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

Diversification Opportunities for Urstadt Biddle and Universal Insurance

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Urstadt and Universal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Urstadt Biddle Properties and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Urstadt Biddle 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 Urstadt Biddle Properties 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 Urstadt Biddle i.e., Urstadt Biddle and Universal Insurance go up and down completely randomly.

Pair Corralation between Urstadt Biddle and Universal Insurance

If you would invest  2,034  in Universal Insurance Holdings on December 29, 2023 and sell it today you would lose (2.00) from holding Universal Insurance Holdings or give up 0.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy4.35%
ValuesDaily Returns

Urstadt Biddle Properties  vs.  Universal Insurance Holdings

 Performance 
       Timeline  
Urstadt Biddle Properties 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Urstadt Biddle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Urstadt Biddle is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Universal Insurance 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Universal Insurance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Urstadt Biddle and Universal Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Urstadt Biddle and Universal Insurance

The main advantage of trading using opposite Urstadt Biddle and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urstadt Biddle 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 Urstadt Biddle Properties 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.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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