Correlation Between James River and First Acceptance
Can any of the company-specific risk be diversified away by investing in both James River and First Acceptance 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 James River and First Acceptance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James River Group and First Acceptance Corp, you can compare the effects of market volatilities on James River and First Acceptance 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 James River with a short position of First Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of James River and First Acceptance.
Diversification Opportunities for James River and First Acceptance
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between James and First is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding James River Group and First Acceptance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Acceptance Corp and James River 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 James River Group are associated (or correlated) with First Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Acceptance Corp has no effect on the direction of James River i.e., James River and First Acceptance go up and down completely randomly.
Pair Corralation between James River and First Acceptance
Given the investment horizon of 90 days James River Group is expected to under-perform the First Acceptance. In addition to that, James River is 1.11 times more volatile than First Acceptance Corp. It trades about -0.07 of its total potential returns per unit of risk. First Acceptance Corp is currently generating about 0.17 per unit of volatility. If you would invest 71.00 in First Acceptance Corp on August 28, 2024 and sell it today you would earn a total of 9.00 from holding First Acceptance Corp or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 5.04% |
| Values | Daily Returns |
James River Group vs. First Acceptance Corp
Performance |
| Timeline |
| James River Group |
| First Acceptance Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
James River and First Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James River and First Acceptance
The main advantage of trading using opposite James River and First Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James River position performs unexpectedly, First Acceptance 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 First Acceptance will offset losses from the drop in First Acceptance's long position.| James River vs. Employers Holdings | James River vs. Investors Title | James River vs. AMERISAFE | James River vs. Essent Group |
| First Acceptance vs. Essent Group | First Acceptance vs. James River Group | First Acceptance vs. MGIC Investment Corp | First Acceptance vs. Employers 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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