Correlation Between United Insurance and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both United Insurance and Gildan Activewear 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 Gildan Activewear 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 Gildan Activewear, you can compare the effects of market volatilities on United Insurance and Gildan Activewear 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 Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Gildan Activewear.
Diversification Opportunities for United Insurance and Gildan Activewear
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Gildan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear 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 Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of United Insurance i.e., United Insurance and Gildan Activewear go up and down completely randomly.
Pair Corralation between United Insurance and Gildan Activewear
Assuming the 90 days horizon United Insurance Holdings is expected to generate 4.69 times more return on investment than Gildan Activewear. However, United Insurance is 4.69 times more volatile than Gildan Activewear. It trades about 0.22 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.38 per unit of risk. If you would invest 965.00 in United Insurance Holdings on August 25, 2024 and sell it today you would earn a total of 265.00 from holding United Insurance Holdings or generate 27.46% 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. Gildan Activewear
Performance |
| Timeline |
| United Insurance Holdings |
| Gildan Activewear |
United Insurance and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Gildan Activewear
The main advantage of trading using opposite United Insurance and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear's long position.| United Insurance vs. QBE Insurance Group | United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. NMI Holdings |
| Gildan Activewear vs. United Insurance Holdings | Gildan Activewear vs. Universal Insurance Holdings | Gildan Activewear vs. Japan Post Insurance | Gildan Activewear vs. LIFENET INSURANCE CO |
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 CEOs Directory module to screen CEOs from public companies around the world.
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