Correlation Between United Insurance and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both United Insurance and Prudential Financial 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 Prudential Financial 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 Prudential Financial, you can compare the effects of market volatilities on United Insurance and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Prudential Financial.
Diversification Opportunities for United Insurance and Prudential Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Prudential is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of United Insurance i.e., United Insurance and Prudential Financial go up and down completely randomly.
Pair Corralation between United Insurance and Prudential Financial
Assuming the 90 days horizon United Insurance Holdings is expected to generate 2.18 times more return on investment than Prudential Financial. However, United Insurance is 2.18 times more volatile than Prudential Financial. It trades about 0.06 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.08 per unit of risk. If you would invest 1,050 in United Insurance Holdings on September 3, 2024 and sell it today you would earn a total of 230.00 from holding United Insurance Holdings or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. Prudential Financial
Performance |
| Timeline |
| United Insurance Holdings |
| Prudential Financial |
United Insurance and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Prudential Financial
The main advantage of trading using opposite United Insurance and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| United Insurance vs. The Progressive | United Insurance vs. The Allstate | United Insurance vs. PICC Property and | United Insurance vs. Fairfax Financial Holdings |
| Prudential Financial vs. Ping An Insurance | Prudential Financial vs. China Life Insurance | Prudential Financial vs. Superior Plus Corp | Prudential Financial vs. Origin Agritech |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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