Correlation Between Premier Insurance and United Insurance
Can any of the company-specific risk be diversified away by investing in both Premier Insurance 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 Premier Insurance and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and United Insurance, you can compare the effects of market volatilities on Premier Insurance 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 Premier Insurance with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and United Insurance.
Diversification Opportunities for Premier Insurance and United Insurance
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Premier and United is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance and Premier Insurance 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 Premier Insurance 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 has no effect on the direction of Premier Insurance i.e., Premier Insurance and United Insurance go up and down completely randomly.
Pair Corralation between Premier Insurance and United Insurance
Assuming the 90 days trading horizon Premier Insurance is expected to under-perform the United Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Premier Insurance is 1.05 times less risky than United Insurance. The stock trades about -0.14 of its potential returns per unit of risk. The United Insurance is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,569 in United Insurance on October 26, 2024 and sell it today you would earn a total of 87.00 from holding United Insurance or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Insurance vs. United Insurance
Performance |
| Timeline |
| Premier Insurance |
| United Insurance |
Premier Insurance and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Insurance and United Insurance
The main advantage of trading using opposite Premier Insurance and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance 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.| Premier Insurance vs. Orient Rental Modaraba | Premier Insurance vs. Shifa International Hospitals | Premier Insurance vs. Hi Tech Lubricants | Premier Insurance vs. Habib Insurance |
| United Insurance vs. Premier Insurance | United Insurance vs. Jubilee Life Insurance | United Insurance vs. Amreli Steels | United Insurance vs. Air Link Communication |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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