Correlation Between United Fire and HCI
Can any of the company-specific risk be diversified away by investing in both United Fire and HCI 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 HCI 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 HCI Group, you can compare the effects of market volatilities on United Fire and HCI 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 HCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and HCI.
Diversification Opportunities for United Fire and HCI
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and HCI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and HCI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCI Group 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 HCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCI Group has no effect on the direction of United Fire i.e., United Fire and HCI go up and down completely randomly.
Pair Corralation between United Fire and HCI
Given the investment horizon of 90 days United Fire Group is expected to under-perform the HCI. But the stock apears to be less risky and, when comparing its historical volatility, United Fire Group is 1.18 times less risky than HCI. The stock trades about -0.27 of its potential returns per unit of risk. The HCI Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 11,125 in HCI Group on October 20, 2024 and sell it today you would earn a total of 1,050 from holding HCI Group or generate 9.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. HCI Group
Performance |
| Timeline |
| United Fire Group |
| HCI Group |
United Fire and HCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and HCI
The main advantage of trading using opposite United Fire and HCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, HCI 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 HCI will offset losses from the drop in HCI'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 |
| HCI vs. Universal Insurance Holdings | HCI vs. Kingstone Companies | HCI vs. Horace Mann Educators | HCI vs. Heritage Insurance Hldgs |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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