Correlation Between Universal Insurance and Cabot
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Cabot 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 Cabot 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 Cabot, you can compare the effects of market volatilities on Universal Insurance and Cabot 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 Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Cabot.
Diversification Opportunities for Universal Insurance and Cabot
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Cabot is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot 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 Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Universal Insurance i.e., Universal Insurance and Cabot go up and down completely randomly.
Pair Corralation between Universal Insurance and Cabot
Considering the 90-day investment horizon Universal Insurance Holdings is expected to generate 1.31 times more return on investment than Cabot. However, Universal Insurance is 1.31 times more volatile than Cabot. It trades about 0.16 of its potential returns per unit of risk. Cabot is currently generating about -0.16 per unit of risk. If you would invest 2,475 in Universal Insurance Holdings on September 8, 2025 and sell it today you would earn a total of 638.00 from holding Universal Insurance Holdings or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Cabot
Performance |
| Timeline |
| Universal Insurance |
| Cabot |
Universal Insurance and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Cabot
The main advantage of trading using opposite Universal Insurance and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| Universal Insurance vs. Pentair PLC | Universal Insurance vs. EvoAir Holdings | Universal Insurance vs. Corsair Gaming | Universal Insurance vs. HF Sinclair Corp |
| Cabot vs. Pebblebrook Hotel Trust | Cabot vs. Sunstone Hotel Investors | Cabot vs. RLJ Lodging Trust | Cabot vs. PTT Global Chemical |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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