Correlation Between TPL Insurance and Premier Insurance
Can any of the company-specific risk be diversified away by investing in both TPL Insurance and Premier 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 TPL Insurance and Premier Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPL Insurance and Premier Insurance, you can compare the effects of market volatilities on TPL Insurance and Premier 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 TPL Insurance with a short position of Premier Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Insurance and Premier Insurance.
Diversification Opportunities for TPL Insurance and Premier Insurance
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TPL and Premier is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding TPL Insurance and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance and TPL 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 TPL Insurance are associated (or correlated) with Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of TPL Insurance i.e., TPL Insurance and Premier Insurance go up and down completely randomly.
Pair Corralation between TPL Insurance and Premier Insurance
Assuming the 90 days trading horizon TPL Insurance is expected to generate 0.8 times more return on investment than Premier Insurance. However, TPL Insurance is 1.25 times less risky than Premier Insurance. It trades about 0.07 of its potential returns per unit of risk. Premier Insurance is currently generating about -0.08 per unit of risk. If you would invest 975.00 in TPL Insurance on August 25, 2024 and sell it today you would earn a total of 38.00 from holding TPL Insurance or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.82% |
| Values | Daily Returns |
TPL Insurance vs. Premier Insurance
Performance |
| Timeline |
| TPL Insurance |
| Premier Insurance |
TPL Insurance and Premier Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPL Insurance and Premier Insurance
The main advantage of trading using opposite TPL Insurance and Premier Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPL Insurance position performs unexpectedly, Premier 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 Premier Insurance will offset losses from the drop in Premier Insurance's long position.| TPL Insurance vs. Soneri Bank | TPL Insurance vs. 786 Investment Limited | TPL Insurance vs. Habib Insurance | TPL Insurance vs. Apna Microfinance Bank |
| Premier Insurance vs. Adamjee Insurance | Premier Insurance vs. Atlas Insurance | Premier Insurance vs. Data Agro | Premier Insurance vs. 786 Investment Limited |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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