Correlation Between Hippo Holdings and AMERISAFE
Can any of the company-specific risk be diversified away by investing in both Hippo Holdings and AMERISAFE 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 Hippo Holdings and AMERISAFE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hippo Holdings and AMERISAFE, you can compare the effects of market volatilities on Hippo Holdings and AMERISAFE 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 Hippo Holdings with a short position of AMERISAFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hippo Holdings and AMERISAFE.
Diversification Opportunities for Hippo Holdings and AMERISAFE
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hippo and AMERISAFE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hippo Holdings and AMERISAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERISAFE and Hippo Holdings 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 Hippo Holdings are associated (or correlated) with AMERISAFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERISAFE has no effect on the direction of Hippo Holdings i.e., Hippo Holdings and AMERISAFE go up and down completely randomly.
Pair Corralation between Hippo Holdings and AMERISAFE
Given the investment horizon of 90 days Hippo Holdings is expected to generate 2.24 times more return on investment than AMERISAFE. However, Hippo Holdings is 2.24 times more volatile than AMERISAFE. It trades about 0.39 of its potential returns per unit of risk. AMERISAFE is currently generating about 0.22 per unit of risk. If you would invest 1,892 in Hippo Holdings on August 24, 2024 and sell it today you would earn a total of 1,314 from holding Hippo Holdings or generate 69.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hippo Holdings vs. AMERISAFE
Performance |
| Timeline |
| Hippo Holdings |
| AMERISAFE |
Hippo Holdings and AMERISAFE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hippo Holdings and AMERISAFE
The main advantage of trading using opposite Hippo Holdings and AMERISAFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hippo Holdings position performs unexpectedly, AMERISAFE 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 AMERISAFE will offset losses from the drop in AMERISAFE's long position.| Hippo Holdings vs. ICC Holdings | Hippo Holdings vs. Employers Holdings | Hippo Holdings vs. AMERISAFE | Hippo Holdings vs. NMI Holdings |
| AMERISAFE vs. Assured Guaranty | AMERISAFE vs. MBIA Inc | AMERISAFE vs. Enact Holdings | AMERISAFE vs. ICC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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