Correlation Between Quest Diagnostics and Universal Health
Can any of the company-specific risk be diversified away by investing in both Quest Diagnostics and Universal Health 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 Quest Diagnostics and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quest Diagnostics Incorporated and Universal Health Services, you can compare the effects of market volatilities on Quest Diagnostics and Universal Health 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 Quest Diagnostics with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quest Diagnostics and Universal Health.
Diversification Opportunities for Quest Diagnostics and Universal Health
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Quest and Universal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Quest Diagnostics Incorporated and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and Quest Diagnostics 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 Quest Diagnostics Incorporated are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Quest Diagnostics i.e., Quest Diagnostics and Universal Health go up and down completely randomly.
Pair Corralation between Quest Diagnostics and Universal Health
Considering the 90-day investment horizon Quest Diagnostics is expected to generate 1.59 times less return on investment than Universal Health. But when comparing it to its historical volatility, Quest Diagnostics Incorporated is 1.27 times less risky than Universal Health. It trades about 0.04 of its potential returns per unit of risk. Universal Health Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17,757 in Universal Health Services on June 7, 2025 and sell it today you would earn a total of 811.00 from holding Universal Health Services or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quest Diagnostics Incorporated vs. Universal Health Services
Performance |
| Timeline |
| Quest Diagnostics |
| Universal Health Services |
Quest Diagnostics and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quest Diagnostics and Universal Health
The main advantage of trading using opposite Quest Diagnostics and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quest Diagnostics position performs unexpectedly, Universal Health 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 Health will offset losses from the drop in Universal Health's long position.| Quest Diagnostics vs. Becton Dickinson and | Quest Diagnostics vs. Cencora | Quest Diagnostics vs. Charles River Laboratories | Quest Diagnostics vs. DaVita HealthCare Partners |
| Universal Health vs. The Ensign Group | Universal Health vs. Addus HomeCare | Universal Health vs. Encompass Health Corp | Universal Health vs. Surgery Partners |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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