Correlation Between United Insurance and Metro AG
Can any of the company-specific risk be diversified away by investing in both United Insurance and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on United Insurance and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Metro AG.
Diversification Opportunities for United Insurance and Metro AG
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Metro is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of United Insurance i.e., United Insurance and Metro AG go up and down completely randomly.
Pair Corralation between United Insurance and Metro AG
Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the Metro AG. But the stock apears to be less risky and, when comparing its historical volatility, United Insurance Holdings is 1.05 times less risky than Metro AG. The stock trades about -0.12 of its potential returns per unit of risk. The Metro AG is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 404.00 in Metro AG on October 16, 2024 and sell it today you would lose (3.00) from holding Metro AG or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. Metro AG
Performance |
| Timeline |
| United Insurance Holdings |
| Metro AG |
United Insurance and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Metro AG
The main advantage of trading using opposite United Insurance and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| United Insurance vs. VITEC SOFTWARE GROUP | United Insurance vs. Easy Software AG | United Insurance vs. ASURE SOFTWARE | United Insurance vs. Constellation Software |
| Metro AG vs. CDN IMPERIAL BANK | Metro AG vs. Synovus Financial Corp | Metro AG vs. Webster Financial | Metro AG vs. United Insurance 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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