Correlation Between United Insurance and BlueScope Steel
Can any of the company-specific risk be diversified away by investing in both United Insurance and BlueScope Steel 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 BlueScope Steel 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 BlueScope Steel Limited, you can compare the effects of market volatilities on United Insurance and BlueScope Steel 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 BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and BlueScope Steel.
Diversification Opportunities for United Insurance and BlueScope Steel
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and BlueScope is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel 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 BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of United Insurance i.e., United Insurance and BlueScope Steel go up and down completely randomly.
Pair Corralation between United Insurance and BlueScope Steel
Assuming the 90 days horizon United Insurance Holdings is expected to generate 4.11 times more return on investment than BlueScope Steel. However, United Insurance is 4.11 times more volatile than BlueScope Steel Limited. It trades about 0.1 of its potential returns per unit of risk. BlueScope Steel Limited is currently generating about 0.04 per unit of risk. If you would invest 95.00 in United Insurance Holdings on September 13, 2024 and sell it today you would earn a total of 1,215 from holding United Insurance Holdings or generate 1278.95% 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. BlueScope Steel Limited
Performance |
| Timeline |
| United Insurance Holdings |
| BlueScope Steel |
United Insurance and BlueScope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and BlueScope Steel
The main advantage of trading using opposite United Insurance and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, BlueScope Steel 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 BlueScope Steel will offset losses from the drop in BlueScope Steel's long position.| United Insurance vs. QBE Insurance Group | United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. SIVERS SEMICONDUCTORS AB |
| BlueScope Steel vs. United Insurance Holdings | BlueScope Steel vs. Insurance Australia Group | BlueScope Steel vs. LPKF Laser Electronics | BlueScope Steel vs. Ping An Insurance |
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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