Correlation Between W R and United Fire
Can any of the company-specific risk be diversified away by investing in both W R and United Fire 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 W R and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W R Berkley and United Fire Group, you can compare the effects of market volatilities on W R and United Fire 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 W R with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of W R and United Fire.
Diversification Opportunities for W R and United Fire
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WRB and United is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding W R Berkley and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group and W R 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 W R Berkley are associated (or correlated) with United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of W R i.e., W R and United Fire go up and down completely randomly.
Pair Corralation between W R and United Fire
Considering the 90-day investment horizon W R is expected to generate 8.31 times less return on investment than United Fire. But when comparing it to its historical volatility, W R Berkley is 4.01 times less risky than United Fire. It trades about 0.16 of its potential returns per unit of risk. United Fire Group is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,002 in United Fire Group on August 24, 2024 and sell it today you would earn a total of 973.00 from holding United Fire Group or generate 48.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
W R Berkley vs. United Fire Group
Performance |
| Timeline |
| W R Berkley |
| United Fire Group |
W R and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with W R and United Fire
The main advantage of trading using opposite W R and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W R position performs unexpectedly, United Fire 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 United Fire will offset losses from the drop in United Fire's long position.The idea behind W R Berkley and United Fire Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |