Correlation Between United Fire and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both United Fire and Shoe Carnival 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 Shoe Carnival 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 Shoe Carnival, you can compare the effects of market volatilities on United Fire and Shoe Carnival 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 Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Shoe Carnival.
Diversification Opportunities for United Fire and Shoe Carnival
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Shoe is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival 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 Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of United Fire i.e., United Fire and Shoe Carnival go up and down completely randomly.
Pair Corralation between United Fire and Shoe Carnival
Given the investment horizon of 90 days United Fire Group is expected to generate 2.15 times more return on investment than Shoe Carnival. However, United Fire is 2.15 times more volatile than Shoe Carnival. It trades about 0.42 of its potential returns per unit of risk. Shoe Carnival is currently generating about 0.06 per unit of risk. If you would invest 1,932 in United Fire Group on September 4, 2024 and sell it today you would earn a total of 1,152 from holding United Fire Group or generate 59.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. Shoe Carnival
Performance |
| Timeline |
| United Fire Group |
| Shoe Carnival |
United Fire and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Shoe Carnival
The main advantage of trading using opposite United Fire and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival'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 |
| Shoe Carnival vs. Appian Corp | Shoe Carnival vs. Okta Inc | Shoe Carnival vs. MongoDB | Shoe Carnival vs. Twilio 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |