Correlation Between HCI and Kingstone Companies
Can any of the company-specific risk be diversified away by investing in both HCI and Kingstone Companies 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 Kingstone Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCI Group and Kingstone Companies, you can compare the effects of market volatilities on HCI and Kingstone Companies 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 Kingstone Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCI and Kingstone Companies.
Diversification Opportunities for HCI and Kingstone Companies
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HCI and Kingstone is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding HCI Group and Kingstone Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstone Companies 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 Kingstone Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstone Companies has no effect on the direction of HCI i.e., HCI and Kingstone Companies go up and down completely randomly.
Pair Corralation between HCI and Kingstone Companies
Considering the 90-day investment horizon HCI is expected to generate 2.95 times less return on investment than Kingstone Companies. But when comparing it to its historical volatility, HCI Group is 1.87 times less risky than Kingstone Companies. It trades about 0.09 of its potential returns per unit of risk. Kingstone Companies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 139.00 in Kingstone Companies on August 29, 2024 and sell it today you would earn a total of 1,457 from holding Kingstone Companies or generate 1048.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCI Group vs. Kingstone Companies
Performance |
| Timeline |
| HCI Group |
| Kingstone Companies |
HCI and Kingstone Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCI and Kingstone Companies
The main advantage of trading using opposite HCI and Kingstone Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCI position performs unexpectedly, Kingstone Companies 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 Kingstone Companies will offset losses from the drop in Kingstone Companies' long position.| HCI vs. Universal Insurance Holdings | HCI vs. Kingstone Companies | HCI vs. Horace Mann Educators | HCI vs. Heritage Insurance Hldgs |
| Kingstone Companies vs. HCI Group | Kingstone Companies vs. Universal Insurance Holdings | Kingstone Companies vs. Horace Mann Educators | Kingstone Companies vs. Heritage Insurance Hldgs |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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