Correlation Between United Insurance and Atlas Insurance
Can any of the company-specific risk be diversified away by investing in both United Insurance and Atlas Insurance 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 Insurance and Atlas Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and Atlas Insurance, you can compare the effects of market volatilities on United Insurance and Atlas Insurance 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 Insurance with a short position of Atlas Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Atlas Insurance.
Diversification Opportunities for United Insurance and Atlas Insurance
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Atlas is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and Atlas Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Insurance and United Insurance 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 Insurance are associated (or correlated) with Atlas Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Insurance has no effect on the direction of United Insurance i.e., United Insurance and Atlas Insurance go up and down completely randomly.
Pair Corralation between United Insurance and Atlas Insurance
Assuming the 90 days trading horizon United Insurance is expected to under-perform the Atlas Insurance. But the stock apears to be less risky and, when comparing its historical volatility, United Insurance is 1.64 times less risky than Atlas Insurance. The stock trades about -0.21 of its potential returns per unit of risk. The Atlas Insurance is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 4,551 in Atlas Insurance on August 30, 2024 and sell it today you would earn a total of 901.00 from holding Atlas Insurance or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Insurance vs. Atlas Insurance
Performance |
| Timeline |
| United Insurance |
| Atlas Insurance |
United Insurance and Atlas Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Atlas Insurance
The main advantage of trading using opposite United Insurance and Atlas Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Atlas Insurance 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 Atlas Insurance will offset losses from the drop in Atlas Insurance's long position.| United Insurance vs. Masood Textile Mills | United Insurance vs. Fauji Foods | United Insurance vs. KSB Pumps | United Insurance vs. Mari Petroleum |
| Atlas Insurance vs. Masood Textile Mills | Atlas Insurance vs. Fauji Foods | Atlas Insurance vs. KSB Pumps | Atlas Insurance vs. Mari Petroleum |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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