Correlation Between Lancashire Holdings and Radian
Can any of the company-specific risk be diversified away by investing in both Lancashire Holdings and Radian 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 Lancashire Holdings and Radian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancashire Holdings Limited and Radian Group, you can compare the effects of market volatilities on Lancashire Holdings and Radian 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 Lancashire Holdings with a short position of Radian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancashire Holdings and Radian.
Diversification Opportunities for Lancashire Holdings and Radian
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lancashire and Radian is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lancashire Holdings Limited and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian Group and Lancashire Holdings 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 Lancashire Holdings Limited are associated (or correlated) with Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of Lancashire Holdings i.e., Lancashire Holdings and Radian go up and down completely randomly.
Pair Corralation between Lancashire Holdings and Radian
Assuming the 90 days horizon Lancashire Holdings is expected to generate 1.7 times less return on investment than Radian. In addition to that, Lancashire Holdings is 1.21 times more volatile than Radian Group. It trades about 0.04 of its total potential returns per unit of risk. Radian Group is currently generating about 0.09 per unit of volatility. If you would invest 1,635 in Radian Group on September 14, 2024 and sell it today you would earn a total of 1,545 from holding Radian Group or generate 94.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lancashire Holdings Limited vs. Radian Group
Performance |
| Timeline |
| Lancashire Holdings |
| Radian Group |
Lancashire Holdings and Radian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancashire Holdings and Radian
The main advantage of trading using opposite Lancashire Holdings and Radian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancashire Holdings position performs unexpectedly, Radian 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 Radian will offset losses from the drop in Radian's long position.| Lancashire Holdings vs. Playa Hotels Resorts | Lancashire Holdings vs. MIRAMAR HOTEL INV | Lancashire Holdings vs. ADRIATIC METALS LS 013355 | Lancashire Holdings vs. INTERCONT HOTELS |
| Radian vs. First American Financial | Radian vs. MGIC Investment | Radian vs. Lancashire Holdings Limited | Radian vs. Trisura Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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