Correlation Between Vita Coco and United Fire
Can any of the company-specific risk be diversified away by investing in both Vita Coco and United Fire 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 Vita Coco and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and United Fire Group, you can compare the effects of market volatilities on Vita Coco and United Fire 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 Vita Coco with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and United Fire.
Diversification Opportunities for Vita Coco and United Fire
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vita and United is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group and Vita Coco 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 Vita Coco are associated (or correlated) with United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of Vita Coco i.e., Vita Coco and United Fire go up and down completely randomly.
Pair Corralation between Vita Coco and United Fire
Given the investment horizon of 90 days Vita Coco is expected to generate 4.41 times less return on investment than United Fire. But when comparing it to its historical volatility, Vita Coco is 2.49 times less risky than United Fire. It trades about 0.23 of its potential returns per unit of risk. United Fire Group is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 1,939 in United Fire Group on September 2, 2024 and sell it today you would earn a total of 1,121 from holding United Fire Group or generate 57.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vita Coco vs. United Fire Group
Performance |
| Timeline |
| Vita Coco |
| United Fire Group |
Vita Coco and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vita Coco and United Fire
The main advantage of trading using opposite Vita Coco and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco position performs unexpectedly, United Fire 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 Fire will offset losses from the drop in United Fire's long position.| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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