Correlation Between NI Holdings and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Universal 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 NI Holdings and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Universal Insurance Holdings, you can compare the effects of market volatilities on NI Holdings and Universal 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 NI Holdings with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Universal Insurance.
Diversification Opportunities for NI Holdings and Universal Insurance
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between NODK and Universal is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and NI 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 NI Holdings are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of NI Holdings i.e., NI Holdings and Universal Insurance go up and down completely randomly.
Pair Corralation between NI Holdings and Universal Insurance
Given the investment horizon of 90 days NI Holdings is expected to generate 1.99 times less return on investment than Universal Insurance. But when comparing it to its historical volatility, NI Holdings is 1.66 times less risky than Universal Insurance. It trades about 0.06 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,634 in Universal Insurance Holdings on August 29, 2024 and sell it today you would earn a total of 638.00 from holding Universal Insurance Holdings or generate 39.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Universal Insurance Holdings
Performance |
| Timeline |
| NI Holdings |
| Universal Insurance |
NI Holdings and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Universal Insurance
The main advantage of trading using opposite NI Holdings and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Universal 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| NI Holdings vs. Argo Group International | NI Holdings vs. Donegal Group A | NI Holdings vs. Selective Insurance Group |
| Universal Insurance vs. Argo Group International | Universal Insurance vs. NI Holdings | Universal Insurance vs. Donegal Group A | Universal Insurance vs. Selective Insurance 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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