Correlation Between United Insurance and Automatic Data
Can any of the company-specific risk be diversified away by investing in both United Insurance and Automatic Data 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 Automatic Data 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 Automatic Data Processing, you can compare the effects of market volatilities on United Insurance and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Automatic Data.
Diversification Opportunities for United Insurance and Automatic Data
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Automatic is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of United Insurance i.e., United Insurance and Automatic Data go up and down completely randomly.
Pair Corralation between United Insurance and Automatic Data
Assuming the 90 days horizon United Insurance Holdings is expected to generate 4.7 times more return on investment than Automatic Data. However, United Insurance is 4.7 times more volatile than Automatic Data Processing. It trades about 0.1 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.07 per unit of risk. If you would invest 169.00 in United Insurance Holdings on November 6, 2024 and sell it today you would earn a total of 1,021 from holding United Insurance Holdings or generate 604.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Insurance Holdings vs. Automatic Data Processing
Performance |
Timeline |
United Insurance Holdings |
Automatic Data Processing |
United Insurance and Automatic Data Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Insurance and Automatic Data
The main advantage of trading using opposite United Insurance and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.United Insurance vs. Ares Management Corp | United Insurance vs. WESANA HEALTH HOLD | United Insurance vs. Siemens Healthineers AG | United Insurance vs. Waste Management |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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