Correlation Between United Insurance and GRUPO CARSO-A1
Can any of the company-specific risk be diversified away by investing in both United Insurance and GRUPO CARSO-A1 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 GRUPO CARSO-A1 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 GRUPO CARSO A1, you can compare the effects of market volatilities on United Insurance and GRUPO CARSO-A1 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 GRUPO CARSO-A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and GRUPO CARSO-A1.
Diversification Opportunities for United Insurance and GRUPO CARSO-A1
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and GRUPO is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 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 GRUPO CARSO-A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of United Insurance i.e., United Insurance and GRUPO CARSO-A1 go up and down completely randomly.
Pair Corralation between United Insurance and GRUPO CARSO-A1
Assuming the 90 days horizon United Insurance Holdings is expected to generate 0.81 times more return on investment than GRUPO CARSO-A1. However, United Insurance Holdings is 1.23 times less risky than GRUPO CARSO-A1. It trades about 0.2 of its potential returns per unit of risk. GRUPO CARSO A1 is currently generating about 0.05 per unit of risk. If you would invest 1,100 in United Insurance Holdings on September 2, 2024 and sell it today you would earn a total of 180.00 from holding United Insurance Holdings or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. GRUPO CARSO A1
Performance |
| Timeline |
| United Insurance Holdings |
| GRUPO CARSO A1 |
United Insurance and GRUPO CARSO-A1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and GRUPO CARSO-A1
The main advantage of trading using opposite United Insurance and GRUPO CARSO-A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, GRUPO CARSO-A1 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 GRUPO CARSO-A1 will offset losses from the drop in GRUPO CARSO-A1's long position.The idea behind United Insurance Holdings and GRUPO CARSO A1 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.| GRUPO CARSO-A1 vs. SIVERS SEMICONDUCTORS AB | GRUPO CARSO-A1 vs. Darden Restaurants | GRUPO CARSO-A1 vs. Reliance Steel Aluminum | GRUPO CARSO-A1 vs. Q2M Managementberatung AG |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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