Correlation Between United Insurance and PRECISION DRILLING
Can any of the company-specific risk be diversified away by investing in both United Insurance and PRECISION DRILLING 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 PRECISION DRILLING 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 PRECISION DRILLING P, you can compare the effects of market volatilities on United Insurance and PRECISION DRILLING 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 PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and PRECISION DRILLING.
Diversification Opportunities for United Insurance and PRECISION DRILLING
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and PRECISION is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING 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 PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of United Insurance i.e., United Insurance and PRECISION DRILLING go up and down completely randomly.
Pair Corralation between United Insurance and PRECISION DRILLING
Assuming the 90 days horizon United Insurance Holdings is expected to generate 1.63 times more return on investment than PRECISION DRILLING. However, United Insurance is 1.63 times more volatile than PRECISION DRILLING P. It trades about 0.2 of its potential returns per unit of risk. PRECISION DRILLING P is currently generating about 0.1 per unit of risk. If you would invest 1,100 in United Insurance Holdings on September 1, 2024 and sell it today you would earn a total of 180.00 from holding United Insurance Holdings or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. PRECISION DRILLING P
Performance |
| Timeline |
| United Insurance Holdings |
| PRECISION DRILLING |
United Insurance and PRECISION DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and PRECISION DRILLING
The main advantage of trading using opposite United Insurance and PRECISION DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, PRECISION DRILLING 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 PRECISION DRILLING will offset losses from the drop in PRECISION DRILLING's long position.| United Insurance vs. The Progressive | United Insurance vs. Fairfax Financial Holdings | United Insurance vs. Insurance Australia Group |
| PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Daldrup Shne Aktiengesellschaft | PRECISION DRILLING vs. Superior Plus Corp | PRECISION DRILLING vs. NMI Holdings |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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