Correlation Between TMX GROUP and United Insurance
Can any of the company-specific risk be diversified away by investing in both TMX GROUP 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 TMX GROUP and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMX GROUP LTD and United Insurance Holdings, you can compare the effects of market volatilities on TMX GROUP 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 TMX GROUP with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMX GROUP and United Insurance.
Diversification Opportunities for TMX GROUP and United Insurance
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TMX and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding TMX GROUP LTD 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 TMX GROUP 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 TMX GROUP LTD 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 TMX GROUP i.e., TMX GROUP and United Insurance go up and down completely randomly.
Pair Corralation between TMX GROUP and United Insurance
Assuming the 90 days horizon TMX GROUP LTD is expected to under-perform the United Insurance. But the stock apears to be less risky and, when comparing its historical volatility, TMX GROUP LTD is 1.02 times less risky than United Insurance. The stock trades about -0.06 of its potential returns per unit of risk. The United Insurance Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,240 in United Insurance Holdings on September 13, 2024 and sell it today you would earn a total of 70.00 from holding United Insurance Holdings or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMX GROUP LTD vs. United Insurance Holdings
Performance |
| Timeline |
| TMX GROUP LTD |
| United Insurance Holdings |
TMX GROUP and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMX GROUP and United Insurance
The main advantage of trading using opposite TMX GROUP and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMX GROUP 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.| TMX GROUP vs. CME Group | TMX GROUP vs. Intercontinental Exchange | TMX GROUP vs. Hong Kong Exchanges | TMX GROUP vs. London Stock Exchange |
| United Insurance vs. QBE Insurance Group | United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. SIVERS SEMICONDUCTORS AB |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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