Correlation Between United Fire and Evertz Technologies
Can any of the company-specific risk be diversified away by investing in both United Fire and Evertz Technologies 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 Evertz Technologies 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 Evertz Technologies Limited, you can compare the effects of market volatilities on United Fire and Evertz Technologies 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 Evertz Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Evertz Technologies.
Diversification Opportunities for United Fire and Evertz Technologies
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Evertz is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies 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 Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of United Fire i.e., United Fire and Evertz Technologies go up and down completely randomly.
Pair Corralation between United Fire and Evertz Technologies
Given the investment horizon of 90 days United Fire Group is expected to generate 3.69 times more return on investment than Evertz Technologies. However, United Fire is 3.69 times more volatile than Evertz Technologies Limited. It trades about 0.38 of its potential returns per unit of risk. Evertz Technologies Limited is currently generating about 0.05 per unit of risk. If you would invest 2,530 in United Fire Group on September 14, 2024 and sell it today you would earn a total of 556.00 from holding United Fire Group or generate 21.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
United Fire Group vs. Evertz Technologies Limited
Performance |
| Timeline |
| United Fire Group |
| Evertz Technologies |
United Fire and Evertz Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Evertz Technologies
The main advantage of trading using opposite United Fire and Evertz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Evertz Technologies 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 Evertz Technologies will offset losses from the drop in Evertz Technologies' long position.| United Fire vs. W R Berkley | United Fire vs. Markel | United Fire vs. RLI Corp | United Fire vs. CNA Financial |
| Evertz Technologies vs. Deere Company | Evertz Technologies vs. Caterpillar | Evertz Technologies vs. Lion Electric Corp | Evertz Technologies vs. Nikola 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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