Correlation Between United Insurance and DICKS Sporting

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Can any of the company-specific risk be diversified away by investing in both United Insurance and DICKS Sporting 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 DICKS Sporting 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 DICKS Sporting Goods, you can compare the effects of market volatilities on United Insurance and DICKS Sporting 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 DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and DICKS Sporting.

Diversification Opportunities for United Insurance and DICKS Sporting

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between United and DICKS is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods 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 DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of United Insurance i.e., United Insurance and DICKS Sporting go up and down completely randomly.

Pair Corralation between United Insurance and DICKS Sporting

Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the DICKS Sporting. But the stock apears to be less risky and, when comparing its historical volatility, United Insurance Holdings is 1.07 times less risky than DICKS Sporting. The stock trades about -0.19 of its potential returns per unit of risk. The DICKS Sporting Goods is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  20,975  in DICKS Sporting Goods on October 17, 2024 and sell it today you would earn a total of  1,160  from holding DICKS Sporting Goods or generate 5.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy94.44%
ValuesDaily Returns

United Insurance Holdings  vs.  DICKS Sporting Goods

 Performance 
       Timeline  
United Insurance Holdings 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Insurance reported solid returns over the last few months and may actually be approaching a breakup point.
DICKS Sporting Goods 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in DICKS Sporting Goods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DICKS Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

United Insurance and DICKS Sporting Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Insurance and DICKS Sporting

The main advantage of trading using opposite United Insurance and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.
The idea behind United Insurance Holdings and DICKS Sporting Goods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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