Correlation Between United Insurance and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both United Insurance and Universal Insurance 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 Universal Insurance 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 Universal Insurance Holdings, you can compare the effects of market volatilities on United Insurance and Universal Insurance 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Universal Insurance.
Diversification Opportunities for United Insurance and Universal Insurance
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Universal is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of United Insurance i.e., United Insurance and Universal Insurance go up and down completely randomly.
Pair Corralation between United Insurance and Universal Insurance
Assuming the 90 days horizon United Insurance Holdings is expected to generate 2.14 times more return on investment than Universal Insurance. However, United Insurance is 2.14 times more volatile than Universal Insurance Holdings. It trades about 0.22 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.29 per unit of risk. If you would invest 965.00 in United Insurance Holdings on August 25, 2024 and sell it today you would earn a total of 265.00 from holding United Insurance Holdings or generate 27.46% 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. Universal Insurance Holdings
Performance |
| Timeline |
| United Insurance Holdings |
| Universal Insurance |
United Insurance and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Universal Insurance
The main advantage of trading using opposite United Insurance and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Universal Insurance 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 Insurance will offset losses from the drop in Universal Insurance's long position.| United Insurance vs. QBE Insurance Group | United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. NMI Holdings |
| Universal Insurance vs. QBE Insurance Group | Universal Insurance vs. Insurance Australia Group | Universal Insurance vs. Superior Plus Corp | Universal Insurance vs. NMI Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |