Correlation Between United Insurance and GEAR4MUSIC (HLDGS)
Can any of the company-specific risk be diversified away by investing in both United Insurance and GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC LS 10, you can compare the effects of market volatilities on United Insurance and GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS). Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and GEAR4MUSIC (HLDGS).
Diversification Opportunities for United Insurance and GEAR4MUSIC (HLDGS)
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and GEAR4MUSIC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC (HLDGS) has no effect on the direction of United Insurance i.e., United Insurance and GEAR4MUSIC (HLDGS) go up and down completely randomly.
Pair Corralation between United Insurance and GEAR4MUSIC (HLDGS)
Assuming the 90 days horizon United Insurance Holdings is expected to generate 1.73 times more return on investment than GEAR4MUSIC (HLDGS). However, United Insurance is 1.73 times more volatile than GEAR4MUSIC LS 10. It trades about 0.07 of its potential returns per unit of risk. GEAR4MUSIC LS 10 is currently generating about -0.13 per unit of risk. If you would invest 1,170 in United Insurance Holdings on November 27, 2024 and sell it today you would earn a total of 30.00 from holding United Insurance Holdings or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. GEAR4MUSIC LS 10
Performance |
| Timeline |
| United Insurance Holdings |
| GEAR4MUSIC (HLDGS) |
United Insurance and GEAR4MUSIC (HLDGS) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and GEAR4MUSIC (HLDGS)
The main advantage of trading using opposite United Insurance and GEAR4MUSIC (HLDGS) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) will offset losses from the drop in GEAR4MUSIC (HLDGS)'s long position.| United Insurance vs. CeoTronics AG | United Insurance vs. Diamyd Medical AB | United Insurance vs. Genertec Universal Medical | United Insurance vs. Pembina Pipeline Corp |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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