Correlation Between Microchip Technology and United Insurance
Can any of the company-specific risk be diversified away by investing in both Microchip Technology and United Insurance 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 Microchip Technology and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microchip Technology Incorporated and United Insurance Holdings, you can compare the effects of market volatilities on Microchip Technology and United Insurance 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 Microchip Technology with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microchip Technology and United Insurance.
Diversification Opportunities for Microchip Technology and United Insurance
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microchip and United is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology Incorpora and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings and Microchip Technology 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 Microchip Technology Incorporated are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of Microchip Technology i.e., Microchip Technology and United Insurance go up and down completely randomly.
Pair Corralation between Microchip Technology and United Insurance
Assuming the 90 days horizon Microchip Technology Incorporated is expected to under-perform the United Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Microchip Technology Incorporated is 1.97 times less risky than United Insurance. The stock trades about -0.08 of its potential returns per unit of risk. The United Insurance Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 980.00 in United Insurance Holdings on August 30, 2024 and sell it today you would earn a total of 300.00 from holding United Insurance Holdings or generate 30.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microchip Technology Incorpora vs. United Insurance Holdings
Performance |
| Timeline |
| Microchip Technology |
| United Insurance Holdings |
Microchip Technology and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microchip Technology and United Insurance
The main advantage of trading using opposite Microchip Technology and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microchip Technology position performs unexpectedly, United Insurance 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 United Insurance will offset losses from the drop in United Insurance's long position.| Microchip Technology vs. Siamgas And Petrochemicals | Microchip Technology vs. ULTRA CLEAN HLDGS | Microchip Technology vs. Datang International Power | Microchip Technology vs. Ultra Clean Holdings |
| United Insurance vs. CPU SOFTWAREHOUSE | United Insurance vs. AXWAY SOFTWARE EO | United Insurance vs. MAGIC SOFTWARE ENTR | United Insurance vs. TITANIUM TRANSPORTGROUP |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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