Correlation Between Kinsale Capital and ProAssurance

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Can any of the company-specific risk be diversified away by investing in both Kinsale Capital and ProAssurance 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 Kinsale Capital and ProAssurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinsale Capital Group and ProAssurance, you can compare the effects of market volatilities on Kinsale Capital and ProAssurance 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 Kinsale Capital with a short position of ProAssurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinsale Capital and ProAssurance.

Diversification Opportunities for Kinsale Capital and ProAssurance

KinsaleProAssuranceDiversified AwayKinsaleProAssuranceDiversified Away100%
0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kinsale and ProAssurance is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital Group and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance and Kinsale Capital 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 Kinsale Capital Group are associated (or correlated) with ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of Kinsale Capital i.e., Kinsale Capital and ProAssurance go up and down completely randomly.

Pair Corralation between Kinsale Capital and ProAssurance

Given the investment horizon of 90 days Kinsale Capital Group is expected to under-perform the ProAssurance. But the stock apears to be less risky and, when comparing its historical volatility, Kinsale Capital Group is 1.33 times less risky than ProAssurance. The stock trades about -0.07 of its potential returns per unit of risk. The ProAssurance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,473  in ProAssurance on December 4, 2024 and sell it today you would earn a total of  100.00  from holding ProAssurance or generate 6.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Kinsale Capital Group  vs.  ProAssurance

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.15KNSL PRA
       Timeline  
Kinsale Capital Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Kinsale Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar420440460480500520540
ProAssurance 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ProAssurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ProAssurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar1414.51515.51616.517

Kinsale Capital and ProAssurance Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.51-2.63-1.75-0.87-0.01470.791.62.413.224.04 0.050.060.070.08
JavaScript chart by amCharts 3.21.15KNSL PRA
       Returns  

Pair Trading with Kinsale Capital and ProAssurance

The main advantage of trading using opposite Kinsale Capital and ProAssurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinsale Capital position performs unexpectedly, ProAssurance 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 ProAssurance will offset losses from the drop in ProAssurance's long position.
The idea behind Kinsale Capital Group and ProAssurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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