Correlation Between United Insurance and New Residential
Can any of the company-specific risk be diversified away by investing in both United Insurance and New Residential 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 United Insurance and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and New Residential Investment, you can compare the effects of market volatilities on United Insurance and New Residential 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 United Insurance with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and New Residential.
Diversification Opportunities for United Insurance and New Residential
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and New is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and United 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 United Insurance Holdings are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of United Insurance i.e., United Insurance and New Residential go up and down completely randomly.
Pair Corralation between United Insurance and New Residential
Assuming the 90 days horizon United Insurance Holdings is expected to generate 3.06 times more return on investment than New Residential. However, United Insurance is 3.06 times more volatile than New Residential Investment. It trades about 0.12 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.21 per unit of risk. If you would invest 1,230 in United Insurance Holdings on September 15, 2024 and sell it today you would earn a total of 80.00 from holding United Insurance Holdings or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. New Residential Investment
Performance |
| Timeline |
| United Insurance Holdings |
| New Residential Inve |
United Insurance and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and New Residential
The main advantage of trading using opposite United Insurance and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. SIVERS SEMICONDUCTORS AB | United Insurance vs. CHINA HUARONG ENERHD 50 |
| New Residential vs. PLAYTIKA HOLDING DL 01 | New Residential vs. Nine Dragons Paper | New Residential vs. Sunstone Hotel Investors | New Residential vs. Onxeo SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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