Correlation Between James River and Tiptree
Can any of the company-specific risk be diversified away by investing in both James River and Tiptree 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 Tiptree 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 Tiptree, you can compare the effects of market volatilities on James River and Tiptree 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 Tiptree. Check out your portfolio center. Please also check ongoing floating volatility patterns of James River and Tiptree.
Diversification Opportunities for James River and Tiptree
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between James and Tiptree is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding James River Group and Tiptree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiptree 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 Tiptree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiptree has no effect on the direction of James River i.e., James River and Tiptree go up and down completely randomly.
Pair Corralation between James River and Tiptree
Given the investment horizon of 90 days James River Group is expected to under-perform the Tiptree. In addition to that, James River is 1.74 times more volatile than Tiptree. It trades about -0.06 of its total potential returns per unit of risk. Tiptree is currently generating about 0.04 per unit of volatility. If you would invest 1,826 in Tiptree on August 24, 2024 and sell it today you would earn a total of 309.00 from holding Tiptree or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
James River Group vs. Tiptree
Performance |
| Timeline |
| James River Group |
| Tiptree |
James River and Tiptree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James River and Tiptree
The main advantage of trading using opposite James River and Tiptree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James River position performs unexpectedly, Tiptree 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 Tiptree will offset losses from the drop in Tiptree's long position.| James River vs. ICC Holdings | James River vs. AMERISAFE | James River vs. NMI Holdings | James River vs. Investors Title |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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