Correlation Between United Fire and Vita Coco
Can any of the company-specific risk be diversified away by investing in both United Fire and Vita Coco 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 Vita Coco 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 Vita Coco, you can compare the effects of market volatilities on United Fire and Vita Coco 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 Vita Coco. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Vita Coco.
Diversification Opportunities for United Fire and Vita Coco
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Vita is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco 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 Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of United Fire i.e., United Fire and Vita Coco go up and down completely randomly.
Pair Corralation between United Fire and Vita Coco
Given the investment horizon of 90 days United Fire is expected to generate 3.66 times less return on investment than Vita Coco. But when comparing it to its historical volatility, United Fire Group is 1.19 times less risky than Vita Coco. It trades about 0.03 of its potential returns per unit of risk. Vita Coco is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,327 in Vita Coco on September 2, 2024 and sell it today you would earn a total of 2,227 from holding Vita Coco or generate 167.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. Vita Coco
Performance |
| Timeline |
| United Fire Group |
| Vita Coco |
United Fire and Vita Coco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Vita Coco
The main advantage of trading using opposite United Fire and Vita Coco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Vita Coco 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 Vita Coco will offset losses from the drop in Vita Coco's long position.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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