Correlation Between United Insurance and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both United Insurance and Abbott Laboratories 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 Abbott Laboratories 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 Abbott Laboratories, you can compare the effects of market volatilities on United Insurance and Abbott Laboratories 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 Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Abbott Laboratories.
Diversification Opportunities for United Insurance and Abbott Laboratories
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Abbott is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories 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 Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of United Insurance i.e., United Insurance and Abbott Laboratories go up and down completely randomly.
Pair Corralation between United Insurance and Abbott Laboratories
Assuming the 90 days horizon United Insurance Holdings is expected to generate 3.88 times more return on investment than Abbott Laboratories. However, United Insurance is 3.88 times more volatile than Abbott Laboratories. It trades about -0.03 of its potential returns per unit of risk. Abbott Laboratories is currently generating about -0.18 per unit of risk. If you would invest 1,280 in United Insurance Holdings on September 25, 2024 and sell it today you would lose (30.00) from holding United Insurance Holdings or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
United Insurance Holdings vs. Abbott Laboratories
Performance |
| Timeline |
| United Insurance Holdings |
| Abbott Laboratories |
United Insurance and Abbott Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Abbott Laboratories
The main advantage of trading using opposite United Insurance and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.| United Insurance vs. Hochschild Mining plc | United Insurance vs. GameStop Corp | United Insurance vs. EAST SIDE GAMES | United Insurance vs. PLAYMATES TOYS |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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