Correlation Between Kingstone Companies and Mercury General
Can any of the company-specific risk be diversified away by investing in both Kingstone Companies and Mercury General 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 Kingstone Companies and Mercury General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingstone Companies and Mercury General, you can compare the effects of market volatilities on Kingstone Companies and Mercury General 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 Kingstone Companies with a short position of Mercury General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingstone Companies and Mercury General.
Diversification Opportunities for Kingstone Companies and Mercury General
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kingstone and Mercury is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kingstone Companies and Mercury General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury General and Kingstone Companies 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 Kingstone Companies are associated (or correlated) with Mercury General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury General has no effect on the direction of Kingstone Companies i.e., Kingstone Companies and Mercury General go up and down completely randomly.
Pair Corralation between Kingstone Companies and Mercury General
Given the investment horizon of 90 days Kingstone Companies is expected to generate 1.93 times more return on investment than Mercury General. However, Kingstone Companies is 1.93 times more volatile than Mercury General. It trades about 0.42 of its potential returns per unit of risk. Mercury General is currently generating about 0.24 per unit of risk. If you would invest 973.00 in Kingstone Companies on August 27, 2024 and sell it today you would earn a total of 542.00 from holding Kingstone Companies or generate 55.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingstone Companies vs. Mercury General
Performance |
| Timeline |
| Kingstone Companies |
| Mercury General |
Kingstone Companies and Mercury General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingstone Companies and Mercury General
The main advantage of trading using opposite Kingstone Companies and Mercury General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingstone Companies position performs unexpectedly, Mercury General 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 Mercury General will offset losses from the drop in Mercury General's long position.| Kingstone Companies vs. HCI Group | Kingstone Companies vs. Universal Insurance Holdings | Kingstone Companies vs. Horace Mann Educators | Kingstone Companies vs. Heritage Insurance Hldgs |
| Mercury General vs. Selective Insurance Group | Mercury General vs. Kemper | Mercury General vs. Donegal Group B | Mercury General vs. Argo Group International |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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