Correlation Between Universal Insurance and HYATT HOTELS

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

Diversification Opportunities for Universal Insurance and HYATT HOTELS

-0.57

Correlation Coefficient

Universal Insurance  HYATT HOTELS

Excellent diversification

The 3 months correlation between Universal and HYATT is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A 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 HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Universal Insurance i.e., Universal Insurance and HYATT HOTELS go up and down completely randomly.

Pair Corralation between Universal Insurance and HYATT HOTELS

Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the HYATT HOTELS. In addition to that, Universal Insurance is 1.12 times more volatile than HYATT HOTELS A. It trades about -0.05 of its total potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.12 per unit of volatility. If you would invest  10,748  in HYATT HOTELS A on May 5, 2025 and sell it today you would earn a total of  1,517  from holding HYATT HOTELS A or generate 14.11% return on investment over 90 days.

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

Universal Insurance Holdings  vs.  HYATT HOTELS A

Universal Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Insurance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Universal Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HYATT HOTELS A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HYATT HOTELS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Insurance and HYATT HOTELS

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

The idea behind Universal Insurance Holdings and HYATT HOTELS A 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.