Correlation Between Alphabet and Kingsway Financial
Can any of the company-specific risk be diversified away by investing in both Alphabet and Kingsway Financial 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 Alphabet and Kingsway Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Kingsway Financial Services, you can compare the effects of market volatilities on Alphabet and Kingsway Financial 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 Alphabet with a short position of Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Kingsway Financial.
Diversification Opportunities for Alphabet and Kingsway Financial
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alphabet and Kingsway is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Alphabet i.e., Alphabet and Kingsway Financial go up and down completely randomly.
Pair Corralation between Alphabet and Kingsway Financial
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.24 times more return on investment than Kingsway Financial. However, Alphabet is 1.24 times more volatile than Kingsway Financial Services. It trades about 0.2 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.05 per unit of risk. If you would invest 19,044 in Alphabet Inc Class C on November 1, 2024 and sell it today you would earn a total of 1,219 from holding Alphabet Inc Class C or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Kingsway Financial Services
Performance |
| Timeline |
| Alphabet Class C |
| Kingsway Financial |
Alphabet and Kingsway Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Kingsway Financial
The main advantage of trading using opposite Alphabet and Kingsway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Kingsway Financial 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 Kingsway Financial will offset losses from the drop in Kingsway Financial's long position.The idea behind Alphabet Inc Class C and Kingsway Financial Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial vs. Group 1 Automotive |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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