Correlation Between United Fire and TransAct Technologies
Can any of the company-specific risk be diversified away by investing in both United Fire and TransAct 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 TransAct 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 TransAct Technologies Incorporated, you can compare the effects of market volatilities on United Fire and TransAct 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 TransAct Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and TransAct Technologies.
Diversification Opportunities for United Fire and TransAct Technologies
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and TransAct is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and TransAct Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAct 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 TransAct Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAct Technologies has no effect on the direction of United Fire i.e., United Fire and TransAct Technologies go up and down completely randomly.
Pair Corralation between United Fire and TransAct Technologies
Given the investment horizon of 90 days United Fire Group is expected to under-perform the TransAct Technologies. But the stock apears to be less risky and, when comparing its historical volatility, United Fire Group is 1.19 times less risky than TransAct Technologies. The stock trades about -0.21 of its potential returns per unit of risk. The TransAct Technologies Incorporated is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 401.00 in TransAct Technologies Incorporated on October 23, 2024 and sell it today you would earn a total of 50.00 from holding TransAct Technologies Incorporated or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. TransAct Technologies Incorpor
Performance |
| Timeline |
| United Fire Group |
| TransAct Technologies |
United Fire and TransAct Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and TransAct Technologies
The main advantage of trading using opposite United Fire and TransAct Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, TransAct 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 TransAct Technologies will offset losses from the drop in TransAct Technologies' 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 |
| TransAct Technologies vs. AstroNova | TransAct Technologies vs. Key Tronic | TransAct Technologies vs. FARO Technologies | TransAct Technologies vs. Hooker Furniture |
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 CEOs Directory module to screen CEOs from public companies around the world.
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