Correlation Between SHIP HEALTHCARE and United Insurance
Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE and United Insurance 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 SHIP HEALTHCARE and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and United Insurance Holdings, you can compare the effects of market volatilities on SHIP HEALTHCARE and United Insurance 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 SHIP HEALTHCARE with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and United Insurance.
Diversification Opportunities for SHIP HEALTHCARE and United Insurance
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SHIP and United is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and United Insurance go up and down completely randomly.
Pair Corralation between SHIP HEALTHCARE and United Insurance
Assuming the 90 days horizon SHIP HEALTHCARE is expected to generate 41.4 times less return on investment than United Insurance. But when comparing it to its historical volatility, SHIP HEALTHCARE HLDGINC is 1.96 times less risky than United Insurance. It trades about 0.01 of its potential returns per unit of risk. United Insurance Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,110 in United Insurance Holdings on September 3, 2024 and sell it today you would earn a total of 170.00 from holding United Insurance Holdings or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIP HEALTHCARE HLDGINC vs. United Insurance Holdings
Performance |
| Timeline |
| SHIP HEALTHCARE HLDGINC |
| United Insurance Holdings |
SHIP HEALTHCARE and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIP HEALTHCARE and United Insurance
The main advantage of trading using opposite SHIP HEALTHCARE and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE position performs unexpectedly, United Insurance 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 United Insurance will offset losses from the drop in United Insurance's long position.| SHIP HEALTHCARE vs. DEVRY EDUCATION GRP | SHIP HEALTHCARE vs. Titan Machinery | SHIP HEALTHCARE vs. CHINA EDUCATION GROUP | SHIP HEALTHCARE vs. United Utilities Group |
| United Insurance vs. The Progressive | United Insurance vs. The Allstate | United Insurance vs. PICC Property and | United Insurance vs. Fairfax Financial 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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