Correlation Between Maiden Holdings and United Fire
Can any of the company-specific risk be diversified away by investing in both Maiden Holdings and United Fire 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 Maiden Holdings and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maiden Holdings and United Fire Group, you can compare the effects of market volatilities on Maiden Holdings and United Fire 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 Maiden Holdings with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maiden Holdings and United Fire.
Diversification Opportunities for Maiden Holdings and United Fire
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maiden and United is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group and Maiden 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 Maiden Holdings are associated (or correlated) with United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and United Fire go up and down completely randomly.
Pair Corralation between Maiden Holdings and United Fire
Given the investment horizon of 90 days Maiden Holdings is expected to generate 1.07 times more return on investment than United Fire. However, Maiden Holdings is 1.07 times more volatile than United Fire Group. It trades about 0.03 of its potential returns per unit of risk. United Fire Group is currently generating about 0.02 per unit of risk. If you would invest 1,349 in Maiden Holdings on August 24, 2024 and sell it today you would earn a total of 344.01 from holding Maiden Holdings or generate 25.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Maiden Holdings vs. United Fire Group
Performance |
| Timeline |
| Maiden Holdings |
| United Fire Group |
Maiden Holdings and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maiden Holdings and United Fire
The main advantage of trading using opposite Maiden Holdings and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maiden Holdings position performs unexpectedly, United Fire 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 Fire will offset losses from the drop in United Fire's long position.| Maiden Holdings vs. Maiden Holdings North | Maiden Holdings vs. Reinsurance Group of | Maiden Holdings vs. Entergy Arkansas LLC | Maiden Holdings vs. Entergy New Orleans |
| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |