Correlation Between Kinsale Capital and ProAssurance
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
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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Kinsale Capital Group vs. ProAssurance
Performance |
| Timeline |
| Kinsale Capital Group |
| ProAssurance |
Kinsale Capital and ProAssurance Volatility Contrast
Predicted Return Density |
| 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.| Kinsale Capital vs. Selective Insurance Group | ||
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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 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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