Correlation Between Enact Holdings and Trupanion
Can any of the company-specific risk be diversified away by investing in both Enact Holdings and Trupanion 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 Enact Holdings and Trupanion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enact Holdings and Trupanion, you can compare the effects of market volatilities on Enact Holdings and Trupanion 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 Enact Holdings with a short position of Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enact Holdings and Trupanion.
Diversification Opportunities for Enact Holdings and Trupanion
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enact and Trupanion is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Enact Holdings and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion and Enact Holdings 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 Enact Holdings are associated (or correlated) with Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of Enact Holdings i.e., Enact Holdings and Trupanion go up and down completely randomly.
Pair Corralation between Enact Holdings and Trupanion
Considering the 90-day investment horizon Enact Holdings is expected to generate 0.13 times more return on investment than Trupanion. However, Enact Holdings is 7.83 times less risky than Trupanion. It trades about -0.17 of its potential returns per unit of risk. Trupanion is currently generating about -0.29 per unit of risk. If you would invest 3,381 in Enact Holdings on November 27, 2024 and sell it today you would lose (89.00) from holding Enact Holdings or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enact Holdings vs. Trupanion
Performance |
| Timeline |
| Enact Holdings |
| Trupanion |
Enact Holdings and Trupanion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enact Holdings and Trupanion
The main advantage of trading using opposite Enact Holdings and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enact Holdings position performs unexpectedly, Trupanion 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 Trupanion will offset losses from the drop in Trupanion's long position.| Enact Holdings vs. Assured Guaranty | Enact Holdings vs. AMERISAFE | Enact Holdings vs. MBIA Inc | Enact Holdings vs. ICC Holdings |
| Trupanion vs. First American | Trupanion vs. Assurant | Trupanion vs. NMI Holdings | Trupanion vs. MGIC Investment Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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