Correlation Between Maiden Holdings and CBOE Volatility
Can any of the company-specific risk be diversified away by investing in both Maiden Holdings and CBOE Volatility 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 CBOE Volatility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maiden Holdings and CBOE Volatility Index, you can compare the effects of market volatilities on Maiden Holdings and CBOE Volatility 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 CBOE Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maiden Holdings and CBOE Volatility.
Diversification Opportunities for Maiden Holdings and CBOE Volatility
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Maiden and CBOE is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and CBOE Volatility Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBOE Volatility Index 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 CBOE Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBOE Volatility Index has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and CBOE Volatility go up and down completely randomly.
Pair Corralation between Maiden Holdings and CBOE Volatility
Given the investment horizon of 90 days Maiden Holdings is expected to generate 1.4 times less return on investment than CBOE Volatility. But when comparing it to its historical volatility, Maiden Holdings is 2.55 times less risky than CBOE Volatility. It trades about 0.03 of its potential returns per unit of risk. CBOE Volatility Index is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,255 in CBOE Volatility Index on September 3, 2024 and sell it today you would lose (921.00) from holding CBOE Volatility Index or give up 40.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.16% |
| Values | Daily Returns |
Maiden Holdings vs. CBOE Volatility Index
Performance |
| Timeline |
Maiden Holdings and CBOE Volatility Volatility Contrast
Predicted Return Density |
| Returns |
Maiden Holdings
Pair trading matchups for Maiden Holdings
CBOE Volatility Index
Pair trading matchups for CBOE Volatility
Pair Trading with Maiden Holdings and CBOE Volatility
The main advantage of trading using opposite Maiden Holdings and CBOE Volatility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maiden Holdings position performs unexpectedly, CBOE Volatility 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 CBOE Volatility will offset losses from the drop in CBOE Volatility'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 |
| CBOE Volatility vs. Nascent Wine | CBOE Volatility vs. Diageo PLC ADR | CBOE Volatility vs. Summit Materials | CBOE Volatility vs. Paiute Oil Mining |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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