Correlation Between HCI and Heritage Insurance
Can any of the company-specific risk be diversified away by investing in both HCI and Heritage 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 HCI and Heritage Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCI Group and Heritage Insurance Hldgs, you can compare the effects of market volatilities on HCI and Heritage 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 HCI with a short position of Heritage Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCI and Heritage Insurance.
Diversification Opportunities for HCI and Heritage Insurance
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HCI and Heritage is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding HCI Group and Heritage Insurance Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Insurance Hldgs and HCI 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 HCI Group are associated (or correlated) with Heritage Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Insurance Hldgs has no effect on the direction of HCI i.e., HCI and Heritage Insurance go up and down completely randomly.
Pair Corralation between HCI and Heritage Insurance
Considering the 90-day investment horizon HCI Group is expected to under-perform the Heritage Insurance. But the stock apears to be less risky and, when comparing its historical volatility, HCI Group is 1.59 times less risky than Heritage Insurance. The stock trades about -0.07 of its potential returns per unit of risk. The Heritage Insurance Hldgs is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,059 in Heritage Insurance Hldgs on August 27, 2024 and sell it today you would earn a total of 190.00 from holding Heritage Insurance Hldgs or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCI Group vs. Heritage Insurance Hldgs
Performance |
| Timeline |
| HCI Group |
| Heritage Insurance Hldgs |
HCI and Heritage Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCI and Heritage Insurance
The main advantage of trading using opposite HCI and Heritage Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCI position performs unexpectedly, Heritage 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 Heritage Insurance will offset losses from the drop in Heritage Insurance's long position.| HCI vs. Universal Insurance Holdings | HCI vs. Kingstone Companies | HCI vs. Horace Mann Educators | HCI vs. Heritage Insurance Hldgs |
| Heritage Insurance vs. Universal Insurance Holdings | Heritage Insurance vs. Donegal Group B | Heritage Insurance vs. Horace Mann Educators | Heritage Insurance vs. NI Holdings |
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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