Correlation Between James River and Hippo Holdings
Can any of the company-specific risk be diversified away by investing in both James River and Hippo Holdings 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 Hippo Holdings 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 Hippo Holdings, you can compare the effects of market volatilities on James River and Hippo Holdings 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 Hippo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of James River and Hippo Holdings.
Diversification Opportunities for James River and Hippo Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between James and Hippo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding James River Group and Hippo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hippo Holdings 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 Hippo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hippo Holdings has no effect on the direction of James River i.e., James River and Hippo Holdings go up and down completely randomly.
Pair Corralation between James River and Hippo Holdings
Given the investment horizon of 90 days James River Group is expected to under-perform the Hippo Holdings. But the stock apears to be less risky and, when comparing its historical volatility, James River Group is 1.39 times less risky than Hippo Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The Hippo Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,831 in Hippo Holdings on August 27, 2024 and sell it today you would earn a total of 1,570 from holding Hippo Holdings or generate 85.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
James River Group vs. Hippo Holdings
Performance |
| Timeline |
| James River Group |
| Hippo Holdings |
James River and Hippo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James River and Hippo Holdings
The main advantage of trading using opposite James River and Hippo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James River position performs unexpectedly, Hippo Holdings 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 Hippo Holdings will offset losses from the drop in Hippo Holdings' long position.| James River vs. Employers Holdings | James River vs. Investors Title | James River vs. AMERISAFE | James River vs. Essent Group |
| Hippo Holdings vs. ICC Holdings | Hippo Holdings vs. Employers Holdings | Hippo Holdings vs. AMERISAFE | Hippo Holdings vs. NMI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |