Correlation Between Universal Health and RMR

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

By analyzing existing cross correlation between Universal Health Realty and RMR Group, you can compare the effects of market volatilities on Universal Health and RMR 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 RMR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and RMR.

Diversification Opportunities for Universal Health and RMR

0.71

Correlation Coefficient

Universal Health  RMR

Poor diversification

The 3 months correlation between Universal and RMR is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and RMR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMR Group 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 Realty are associated (or correlated) with RMR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMR Group has no effect on the direction of Universal Health i.e., Universal Health and RMR go up and down completely randomly.

Pair Corralation between Universal Health and RMR

Considering the 90-day investment horizon Universal Health Realty is expected to generate 0.88 times more return on investment than RMR. However, Universal Health Realty is 1.13 times less risky than RMR. It trades about 0.05 of its potential returns per unit of risk. RMR Group is currently generating about 0.01 per unit of risk. If you would invest  3,792  in Universal Health Realty on September 29, 2025 and sell it today you would earn a total of  141.00  from holding Universal Health Realty or generate 3.72% return on investment over 90 days.

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

Universal Health Realty  vs.  RMR Group

Universal Health Realty

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Health Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Universal Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

RMR Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RMR Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, RMR is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Universal Health and RMR

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

The idea behind Universal Health Realty and RMR Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.