Correlation Between United Insurance and H M

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

Diversification Opportunities for United Insurance and H M

0.65
  Correlation Coefficient
 H M

Poor diversification

The 3 months correlation between United and HMSB is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes 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 H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of United Insurance i.e., United Insurance and H M go up and down completely randomly.

Pair Corralation between United Insurance and H M

Assuming the 90 days horizon United Insurance Holdings is expected to generate 2.6 times more return on investment than H M. However, United Insurance is 2.6 times more volatile than H M Hennes. It trades about 0.12 of its potential returns per unit of risk. H M Hennes is currently generating about 0.09 per unit of risk. If you would invest  26.00  in United Insurance Holdings on September 5, 2024 and sell it today you would earn a total of  1,264  from holding United Insurance Holdings or generate 4861.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.01%
ValuesDaily Returns

United Insurance Holdings  vs.  H M Hennes

 Performance 
       Timeline  
United Insurance Holdings 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 9 (%) 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.
H M Hennes 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in H M Hennes are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, H M exhibited solid returns over the last few months and may actually be approaching a breakup point.

United Insurance and H M Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Insurance and H M

The main advantage of trading using opposite United Insurance and H M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, H M 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 H M will offset losses from the drop in H M's long position.
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The idea behind United Insurance Holdings and H M Hennes 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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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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