Correlation Between Shoe Carnival and United Fire
Can any of the company-specific risk be diversified away by investing in both Shoe Carnival 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 Shoe Carnival and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoe Carnival and United Fire Group, you can compare the effects of market volatilities on Shoe Carnival 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 Shoe Carnival with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and United Fire.
Diversification Opportunities for Shoe Carnival and United Fire
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shoe and United is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival 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 Shoe Carnival 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 Shoe Carnival 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 Shoe Carnival i.e., Shoe Carnival and United Fire go up and down completely randomly.
Pair Corralation between Shoe Carnival and United Fire
Given the investment horizon of 90 days Shoe Carnival is expected to generate 14.13 times less return on investment than United Fire. But when comparing it to its historical volatility, Shoe Carnival is 2.15 times less risky than United Fire. It trades about 0.06 of its potential returns per unit of risk. United Fire Group is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,932 in United Fire Group on September 4, 2024 and sell it today you would earn a total of 1,152 from holding United Fire Group or generate 59.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoe Carnival vs. United Fire Group
Performance |
| Timeline |
| Shoe Carnival |
| United Fire Group |
Shoe Carnival and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoe Carnival and United Fire
The main advantage of trading using opposite Shoe Carnival and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoe Carnival 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.| Shoe Carnival vs. Appian Corp | Shoe Carnival vs. Okta Inc | Shoe Carnival vs. MongoDB | Shoe Carnival vs. Twilio Inc |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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