Correlation Between United Insurance and TRADEGATE

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

Diversification Opportunities for United Insurance and TRADEGATE

UnitedTRADEGATEDiversified AwayUnitedTRADEGATEDiversified Away100%
0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between United and TRADEGATE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and TRADEGATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRADEGATE 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 TRADEGATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRADEGATE has no effect on the direction of United Insurance i.e., United Insurance and TRADEGATE go up and down completely randomly.

Pair Corralation between United Insurance and TRADEGATE

Assuming the 90 days horizon United Insurance Holdings is expected to generate 5.19 times more return on investment than TRADEGATE. However, United Insurance is 5.19 times more volatile than TRADEGATE. It trades about 0.08 of its potential returns per unit of risk. TRADEGATE is currently generating about -0.06 per unit of risk. If you would invest  1,160  in United Insurance Holdings on November 25, 2024 and sell it today you would earn a total of  40.00  from holding United Insurance Holdings or generate 3.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

United Insurance Holdings  vs.  TRADEGATE

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 051015
JavaScript chart by amCharts 3.21.150UI T2G
       Timeline  
United Insurance Holdings 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days United Insurance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.51212.513
TRADEGATE 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days TRADEGATE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8888.58989.59090.5

United Insurance and TRADEGATE Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.47-5.6-3.72-1.850.01.853.765.677.599.5 12345
JavaScript chart by amCharts 3.21.150UI T2G
       Returns  

Pair Trading with United Insurance and TRADEGATE

The main advantage of trading using opposite United Insurance and TRADEGATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, TRADEGATE 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 TRADEGATE will offset losses from the drop in TRADEGATE's long position.
The idea behind United Insurance Holdings and TRADEGATE 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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