Correlation Between Universal Health and AngioDynamics

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

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

Diversification Opportunities for Universal Health and AngioDynamics

-0.27

Correlation Coefficient

Universal Health  AngioDynamics

Very good diversification

The 3 months correlation between Universal and AngioDynamics is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and AngioDynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngioDynamics and Universal Health 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 Health Services are associated (or correlated) with AngioDynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngioDynamics has no effect on the direction of Universal Health i.e., Universal Health and AngioDynamics go up and down completely randomly.

Pair Corralation between Universal Health and AngioDynamics

Considering the 90-day investment horizon Universal Health Services is expected to generate 0.43 times more return on investment than AngioDynamics. However, Universal Health Services is 2.33 times less risky than AngioDynamics. It trades about 0.28 of its potential returns per unit of risk. AngioDynamics is currently generating about 0.08 per unit of risk. If you would invest  16,491  in Universal Health Services on February 23, 2024 and sell it today you would earn a total of  1,399  from holding Universal Health Services or generate 8.48% return on investment over 90 days.

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

Universal Health Services  vs.  AngioDynamics

Universal Health Services

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Health Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, Universal Health may actually be approaching a critical reversion point that can send shares even higher in June 2024.

AngioDynamics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AngioDynamics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, AngioDynamics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Universal Health and AngioDynamics

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

The idea behind Universal Health Services and AngioDynamics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.