Correlation Between Herald Investment and Hiscox
Can any of the company-specific risk be diversified away by investing in both Herald Investment and Hiscox 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 Herald Investment and Hiscox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Hiscox, you can compare the effects of market volatilities on Herald Investment and Hiscox 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 Herald Investment with a short position of Hiscox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Hiscox.
Diversification Opportunities for Herald Investment and Hiscox
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Herald and Hiscox is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Hiscox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiscox and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Hiscox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiscox has no effect on the direction of Herald Investment i.e., Herald Investment and Hiscox go up and down completely randomly.
Pair Corralation between Herald Investment and Hiscox
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.71 times more return on investment than Hiscox. However, Herald Investment Trust is 1.41 times less risky than Hiscox. It trades about 0.11 of its potential returns per unit of risk. Hiscox is currently generating about 0.02 per unit of risk. If you would invest 181,800 in Herald Investment Trust on September 4, 2024 and sell it today you would earn a total of 56,700 from holding Herald Investment Trust or generate 31.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. Hiscox
Performance |
| Timeline |
| Herald Investment Trust |
| Hiscox |
Herald Investment and Hiscox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Hiscox
The main advantage of trading using opposite Herald Investment and Hiscox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Hiscox 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 Hiscox will offset losses from the drop in Hiscox's long position.| Herald Investment vs. SupplyMe Capital PLC | Herald Investment vs. Lloyds Banking Group | Herald Investment vs. Premier African Minerals | Herald Investment vs. SANTANDER UK 8 |
| Hiscox vs. Taylor Maritime Investments | Hiscox vs. MTI Wireless Edge | Hiscox vs. Fevertree Drinks Plc | Hiscox vs. Herald Investment Trust |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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