Correlation Between U Haul and Universal Stainless

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

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

Diversification Opportunities for U Haul and Universal Stainless

-0.16

Correlation Coefficient

U Haul  Universal Stainless

Good diversification

The 3 months correlation between UHAL and Universal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding U Haul Holding and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy and U Haul 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 U Haul Holding are associated (or correlated) with Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of U Haul i.e., U Haul and Universal Stainless go up and down completely randomly.

Pair Corralation between U Haul and Universal Stainless

Given the investment horizon of 90 days U Haul Holding is expected to under-perform the Universal Stainless. But the stock apears to be less risky and, when comparing its historical volatility, U Haul Holding is 2.23 times less risky than Universal Stainless. The stock trades about -0.12 of its potential returns per unit of risk. The Universal Stainless Alloy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,558  in Universal Stainless Alloy on February 2, 2024 and sell it today you would earn a total of  255.00  from holding Universal Stainless Alloy or generate 9.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

U Haul Holding  vs.  Universal Stainless Alloy

U Haul Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days U Haul Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, U Haul is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Universal Stainless Alloy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Universal Stainless reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Haul and Universal Stainless

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

The idea behind U Haul Holding and Universal Stainless Alloy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.