Correlation Between Waterdrop ADR and International General
Can any of the company-specific risk be diversified away by investing in both Waterdrop ADR and International General 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 Waterdrop ADR and International General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterdrop ADR and International General Insurance, you can compare the effects of market volatilities on Waterdrop ADR and International General 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 Waterdrop ADR with a short position of International General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterdrop ADR and International General.
Diversification Opportunities for Waterdrop ADR and International General
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Waterdrop and International is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Waterdrop ADR and International General Insuranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International General and Waterdrop ADR 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 Waterdrop ADR are associated (or correlated) with International General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International General has no effect on the direction of Waterdrop ADR i.e., Waterdrop ADR and International General go up and down completely randomly.
Pair Corralation between Waterdrop ADR and International General
Considering the 90-day investment horizon Waterdrop ADR is expected to generate 3.68 times less return on investment than International General. In addition to that, Waterdrop ADR is 1.22 times more volatile than International General Insurance. It trades about 0.06 of its total potential returns per unit of risk. International General Insurance is currently generating about 0.27 per unit of volatility. If you would invest 1,772 in International General Insurance on August 24, 2024 and sell it today you would earn a total of 830.00 from holding International General Insurance or generate 46.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waterdrop ADR vs. International General Insuranc
Performance |
| Timeline |
| Waterdrop ADR |
| International General |
Waterdrop ADR and International General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterdrop ADR and International General
The main advantage of trading using opposite Waterdrop ADR and International General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterdrop ADR position performs unexpectedly, International General 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 International General will offset losses from the drop in International General's long position.| Waterdrop ADR vs. Enstar Group Limited | Waterdrop ADR vs. Goosehead Insurance | Waterdrop ADR vs. Axa Equitable Holdings | Waterdrop ADR vs. Fundamental Global |
| International General vs. Enstar Group Limited | International General vs. Axa Equitable Holdings | International General vs. Arch Capital Group | International General vs. Waterdrop ADR |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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