Correlation Between Universal Insurance and AuQ Gold

Can any of the company-specific risk be diversified away by investing in both Universal Insurance and AuQ Gold 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 AuQ Gold 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 AuQ Gold Mining, you can compare the effects of market volatilities on Universal Insurance and AuQ Gold 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 AuQ Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and AuQ Gold.

Diversification Opportunities for Universal Insurance and AuQ Gold

0.86

Correlation Coefficient

Universal Insurance  AuQ Gold

Very poor diversification

The 3 months correlation between Universal and AuQ is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and AuQ Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AuQ Gold Mining 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 AuQ Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AuQ Gold Mining has no effect on the direction of Universal Insurance i.e., Universal Insurance and AuQ Gold go up and down completely randomly.

Pair Corralation between Universal Insurance and AuQ Gold

Considering the 90-day investment horizon Universal Insurance Holdings is expected to generate 0.78 times more return on investment than AuQ Gold. However, Universal Insurance Holdings is 1.29 times less risky than AuQ Gold. It trades about 0.05 of its potential returns per unit of risk. AuQ Gold Mining is currently generating about -0.04 per unit of risk. If you would invest  1,158  in Universal Insurance Holdings on January 25, 2024 and sell it today you would earn a total of  853.00  from holding Universal Insurance Holdings or generate 73.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Universal Insurance Holdings  vs.  AuQ Gold Mining

Universal Insurance

Risk-Adjusted Performance

7 of 100

OK

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

AuQ Gold Mining

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Universal Insurance and AuQ Gold

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

The idea behind Universal Insurance Holdings and AuQ Gold Mining 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.