Correlation Between United Insurance and Preferred Bank
Can any of the company-specific risk be diversified away by investing in both United Insurance and Preferred Bank 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 Preferred Bank 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 Preferred Bank, you can compare the effects of market volatilities on United Insurance and Preferred Bank 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 Preferred Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Preferred Bank.
Diversification Opportunities for United Insurance and Preferred Bank
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Preferred is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Preferred Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Bank 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 Preferred Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Bank has no effect on the direction of United Insurance i.e., United Insurance and Preferred Bank go up and down completely randomly.
Pair Corralation between United Insurance and Preferred Bank
Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the Preferred Bank. In addition to that, United Insurance is 1.75 times more volatile than Preferred Bank. It trades about -0.06 of its total potential returns per unit of risk. Preferred Bank is currently generating about 0.16 per unit of volatility. If you would invest 8,125 in Preferred Bank on October 23, 2024 and sell it today you would earn a total of 275.00 from holding Preferred Bank or generate 3.38% 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. Preferred Bank
Performance |
| Timeline |
| United Insurance Holdings |
| Preferred Bank |
United Insurance and Preferred Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Preferred Bank
The main advantage of trading using opposite United Insurance and Preferred Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Preferred Bank 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 Preferred Bank will offset losses from the drop in Preferred Bank's long position.| United Insurance vs. Flutter Entertainment PLC | United Insurance vs. Tencent Music Entertainment | United Insurance vs. Grupo Media Capital | United Insurance vs. ON SEMICONDUCTOR |
| Preferred Bank vs. POSBO UNSPADRS20YC1 | Preferred Bank vs. Postal Savings Bank | Preferred Bank vs. Truist Financial | Preferred Bank vs. OVERSEA CHINUNSPADR2 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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