Correlation Between United Fire and Inflection Point
Can any of the company-specific risk be diversified away by investing in both United Fire and Inflection Point 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 Inflection Point 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 Inflection Point Acquisition, you can compare the effects of market volatilities on United Fire and Inflection Point 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 Inflection Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Inflection Point.
Diversification Opportunities for United Fire and Inflection Point
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Inflection is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq 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 Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of United Fire i.e., United Fire and Inflection Point go up and down completely randomly.
Pair Corralation between United Fire and Inflection Point
Given the investment horizon of 90 days United Fire Group is expected to generate 5.88 times more return on investment than Inflection Point. However, United Fire is 5.88 times more volatile than Inflection Point Acquisition. It trades about 0.05 of its potential returns per unit of risk. Inflection Point Acquisition is currently generating about 0.06 per unit of risk. If you would invest 2,242 in United Fire Group on September 1, 2024 and sell it today you would earn a total of 818.00 from holding United Fire Group or generate 36.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. Inflection Point Acquisition
Performance |
| Timeline |
| United Fire Group |
| Inflection Point Acq |
United Fire and Inflection Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Inflection Point
The main advantage of trading using opposite United Fire and Inflection Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Inflection Point 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 Inflection Point will offset losses from the drop in Inflection Point'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 |
| Inflection Point vs. Aterian | Inflection Point vs. Church Dwight | Inflection Point vs. Mannatech Incorporated | Inflection Point vs. Saia Inc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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