Correlation Between United Fire and Atmus Filtration
Can any of the company-specific risk be diversified away by investing in both United Fire and Atmus Filtration 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 United Fire and Atmus Filtration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and Atmus Filtration Technologies, you can compare the effects of market volatilities on United Fire and Atmus Filtration 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 United Fire with a short position of Atmus Filtration. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Atmus Filtration.
Diversification Opportunities for United Fire and Atmus Filtration
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Atmus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Atmus Filtration Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmus Filtration Tec and United Fire 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 United Fire Group are associated (or correlated) with Atmus Filtration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmus Filtration Tec has no effect on the direction of United Fire i.e., United Fire and Atmus Filtration go up and down completely randomly.
Pair Corralation between United Fire and Atmus Filtration
Given the investment horizon of 90 days United Fire Group is expected to generate 1.05 times more return on investment than Atmus Filtration. However, United Fire is 1.05 times more volatile than Atmus Filtration Technologies. It trades about 0.04 of its potential returns per unit of risk. Atmus Filtration Technologies is currently generating about -0.16 per unit of risk. If you would invest 2,571 in United Fire Group on November 27, 2024 and sell it today you would earn a total of 27.00 from holding United Fire Group or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. Atmus Filtration Technologies
Performance |
| Timeline |
| United Fire Group |
| Atmus Filtration Tec |
United Fire and Atmus Filtration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Atmus Filtration
The main advantage of trading using opposite United Fire and Atmus Filtration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Atmus Filtration 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 Atmus Filtration will offset losses from the drop in Atmus Filtration's long position.| United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC | United Fire vs. NI Holdings |
| Atmus Filtration vs. Westinghouse Air Brake | Atmus Filtration vs. Dominos Pizza Common | Atmus Filtration vs. Dennys Corp | Atmus Filtration vs. Grupo Aeroportuario del |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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