Correlation Between Universal Insurance and Assurant

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

Diversification Opportunities for Universal Insurance and Assurant

0.8

Correlation Coefficient

Universal Insurance  Assurant

Very poor diversification

The 3 months correlation between Universal and Assurant is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Universal Insurance i.e., Universal Insurance and Assurant go up and down completely randomly.

Pair Corralation between Universal Insurance and Assurant

Considering the 90-day investment horizon Universal Insurance Holdings is expected to under-perform the Assurant. In addition to that, Universal Insurance is 1.41 times more volatile than Assurant. It trades about -0.07 of its total potential returns per unit of risk. Assurant is currently generating about -0.05 per unit of volatility. If you would invest  19,571  in Assurant on May 4, 2025 and sell it today you would lose (923.00) from holding Assurant or give up 4.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Universal Insurance Holdings  vs.  Assurant

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. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Assurant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Assurant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Assurant is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal Insurance and Assurant

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

The idea behind Universal Insurance Holdings and Assurant 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.