Correlation Between Big Bird and United Insurance
Can any of the company-specific risk be diversified away by investing in both Big Bird 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 Big Bird and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Bird Foods and United Insurance, you can compare the effects of market volatilities on Big Bird 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 Big Bird with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and United Insurance.
Diversification Opportunities for Big Bird and United Insurance
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Big and United is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance and Big Bird 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 Big Bird Foods 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 has no effect on the direction of Big Bird i.e., Big Bird and United Insurance go up and down completely randomly.
Pair Corralation between Big Bird and United Insurance
Assuming the 90 days trading horizon Big Bird Foods is expected to under-perform the United Insurance. In addition to that, Big Bird is 4.22 times more volatile than United Insurance. It trades about -0.26 of its total potential returns per unit of risk. United Insurance is currently generating about 0.04 per unit of volatility. If you would invest 1,575 in United Insurance on September 2, 2024 and sell it today you would earn a total of 11.00 from holding United Insurance or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Bird Foods vs. United Insurance
Performance |
| Timeline |
| Big Bird Foods |
| United Insurance |
Big Bird and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and United Insurance
The main advantage of trading using opposite Big Bird and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird 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.| Big Bird vs. Security Investment Bank | Big Bird vs. Meezan Bank | Big Bird vs. ITTEFAQ Iron Industries | Big Bird vs. Reliance Insurance Co |
| United Insurance vs. Habib Bank | United Insurance vs. National Bank of | United Insurance vs. United Bank | United Insurance vs. MCB Bank |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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