Correlation Between Universal Insurance and Kemper
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Kemper 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 Universal Insurance and Kemper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and Kemper, you can compare the effects of market volatilities on Universal Insurance and Kemper 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 Universal Insurance with a short position of Kemper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Kemper.
Diversification Opportunities for Universal Insurance and Kemper
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Kemper is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and Universal 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 Universal Insurance Holdings are associated (or correlated) with Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Universal Insurance i.e., Universal Insurance and Kemper go up and down completely randomly.
Pair Corralation between Universal Insurance and Kemper
Considering the 90-day investment horizon Universal Insurance is expected to generate 1.11 times less return on investment than Kemper. In addition to that, Universal Insurance is 1.42 times more volatile than Kemper. It trades about 0.34 of its total potential returns per unit of risk. Kemper is currently generating about 0.53 per unit of volatility. If you would invest 6,200 in Kemper on September 1, 2024 and sell it today you would earn a total of 949.00 from holding Kemper or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Kemper
Performance |
| Timeline |
| Universal Insurance |
| Kemper |
Universal Insurance and Kemper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Kemper
The main advantage of trading using opposite Universal Insurance and Kemper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Kemper 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 Kemper will offset losses from the drop in Kemper's long position.| Universal Insurance vs. HCI Group | Universal Insurance vs. Kingstone Companies | Universal Insurance vs. Horace Mann Educators | Universal Insurance vs. Heritage Insurance Hldgs |
| Kemper vs. Selective Insurance Group | Kemper vs. Donegal Group B | Kemper vs. Argo Group International | Kemper vs. Global Indemnity PLC |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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