Correlation Between United Fire and AMERICAN
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By analyzing existing cross correlation between United Fire Group and AMERICAN HOMES 4, you can compare the effects of market volatilities on United Fire and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and AMERICAN.
Diversification Opportunities for United Fire and AMERICAN
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and AMERICAN is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and AMERICAN HOMES 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN HOMES 4 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN HOMES 4 has no effect on the direction of United Fire i.e., United Fire and AMERICAN go up and down completely randomly.
Pair Corralation between United Fire and AMERICAN
Given the investment horizon of 90 days United Fire Group is expected to under-perform the AMERICAN. In addition to that, United Fire is 3.14 times more volatile than AMERICAN HOMES 4. It trades about -0.23 of its total potential returns per unit of risk. AMERICAN HOMES 4 is currently generating about -0.04 per unit of volatility. If you would invest 9,931 in AMERICAN HOMES 4 on October 21, 2024 and sell it today you would lose (42.00) from holding AMERICAN HOMES 4 or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
United Fire Group vs. AMERICAN HOMES 4
Performance |
| Timeline |
| United Fire Group |
| AMERICAN HOMES 4 |
United Fire and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and AMERICAN
The main advantage of trading using opposite United Fire and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN'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 |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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