Correlation Between United Fire and Pekin Life
Can any of the company-specific risk be diversified away by investing in both United Fire and Pekin Life 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 Pekin Life 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 Pekin Life Insurance, you can compare the effects of market volatilities on United Fire and Pekin Life 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 Pekin Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Pekin Life.
Diversification Opportunities for United Fire and Pekin Life
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Pekin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of United Fire i.e., United Fire and Pekin Life go up and down completely randomly.
Pair Corralation between United Fire and Pekin Life
Given the investment horizon of 90 days United Fire Group is expected to generate 1.34 times more return on investment than Pekin Life. However, United Fire is 1.34 times more volatile than Pekin Life Insurance. It trades about 0.03 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.01 per unit of risk. If you would invest 2,557 in United Fire Group on August 24, 2024 and sell it today you would earn a total of 432.00 from holding United Fire Group or generate 16.89% 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. Pekin Life Insurance
Performance |
| Timeline |
| United Fire Group |
| Pekin Life Insurance |
United Fire and Pekin Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Pekin Life
The main advantage of trading using opposite United Fire and Pekin Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Pekin Life 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 Pekin Life will offset losses from the drop in Pekin Life'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 |
| Pekin Life vs. FG Annuities Life | Pekin Life vs. MetLife Preferred Stock | Pekin Life vs. Brighthouse Financial | Pekin Life vs. MetLife Preferred Stock |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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