Correlation Between United Insurance and Vale SA
Can any of the company-specific risk be diversified away by investing in both United Insurance and Vale SA 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 Vale SA 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 Vale SA, you can compare the effects of market volatilities on United Insurance and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Vale SA.
Diversification Opportunities for United Insurance and Vale SA
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Vale is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of United Insurance i.e., United Insurance and Vale SA go up and down completely randomly.
Pair Corralation between United Insurance and Vale SA
Assuming the 90 days horizon United Insurance Holdings is expected to generate 2.21 times more return on investment than Vale SA. However, United Insurance is 2.21 times more volatile than Vale SA. It trades about 0.2 of its potential returns per unit of risk. Vale SA is currently generating about -0.17 per unit of risk. If you would invest 1,110 in United Insurance Holdings on September 5, 2024 and sell it today you would earn a total of 180.00 from holding United Insurance Holdings or generate 16.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Insurance Holdings vs. Vale SA
Performance |
| Timeline |
| United Insurance Holdings |
| Vale SA |
United Insurance and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Vale SA
The main advantage of trading using opposite United Insurance and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| United Insurance vs. The Allstate | United Insurance vs. Fairfax Financial Holdings | United Insurance vs. QBE Insurance Group | United Insurance vs. Insurance Australia Group |
| Vale SA vs. SENECA FOODS A | Vale SA vs. CN MODERN DAIRY | Vale SA vs. Pentair plc | Vale SA vs. Westinghouse Air Brake |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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