Correlation Between Siriuspoint and NorthWestern
Can any of the company-specific risk be diversified away by investing in both Siriuspoint and NorthWestern 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 Siriuspoint and NorthWestern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siriuspoint and NorthWestern, you can compare the effects of market volatilities on Siriuspoint and NorthWestern 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 Siriuspoint with a short position of NorthWestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siriuspoint and NorthWestern.
Diversification Opportunities for Siriuspoint and NorthWestern
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Siriuspoint and NorthWestern is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Siriuspoint and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern and Siriuspoint 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 Siriuspoint are associated (or correlated) with NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of Siriuspoint i.e., Siriuspoint and NorthWestern go up and down completely randomly.
Pair Corralation between Siriuspoint and NorthWestern
Given the investment horizon of 90 days Siriuspoint is expected to generate 2.09 times more return on investment than NorthWestern. However, Siriuspoint is 2.09 times more volatile than NorthWestern. It trades about 0.25 of its potential returns per unit of risk. NorthWestern is currently generating about 0.1 per unit of risk. If you would invest 1,359 in Siriuspoint on August 27, 2024 and sell it today you would earn a total of 199.00 from holding Siriuspoint or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siriuspoint vs. NorthWestern
Performance |
| Timeline |
| Siriuspoint |
| NorthWestern |
Siriuspoint and NorthWestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siriuspoint and NorthWestern
The main advantage of trading using opposite Siriuspoint and NorthWestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siriuspoint position performs unexpectedly, NorthWestern 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 NorthWestern will offset losses from the drop in NorthWestern's long position.| Siriuspoint vs. Maiden Holdings | Siriuspoint vs. Reinsurance Group of | Siriuspoint vs. Oxbridge Re Holdings | Siriuspoint vs. Greenlight Capital Re |
| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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