Correlation Between White Mountains and Cable One
Can any of the company-specific risk be diversified away by investing in both White Mountains and Cable One 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 White Mountains and Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between White Mountains Insurance and Cable One, you can compare the effects of market volatilities on White Mountains and Cable One 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 White Mountains with a short position of Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Mountains and Cable One.
Diversification Opportunities for White Mountains and Cable One
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between White and Cable is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and White Mountains 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 White Mountains Insurance are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of White Mountains i.e., White Mountains and Cable One go up and down completely randomly.
Pair Corralation between White Mountains and Cable One
Considering the 90-day investment horizon White Mountains Insurance is expected to generate 0.59 times more return on investment than Cable One. However, White Mountains Insurance is 1.69 times less risky than Cable One. It trades about 0.05 of its potential returns per unit of risk. Cable One is currently generating about -0.04 per unit of risk. If you would invest 146,089 in White Mountains Insurance on August 27, 2024 and sell it today you would earn a total of 52,745 from holding White Mountains Insurance or generate 36.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
White Mountains Insurance vs. Cable One
Performance |
| Timeline |
| White Mountains Insurance |
| Cable One |
White Mountains and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with White Mountains and Cable One
The main advantage of trading using opposite White Mountains and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.| White Mountains vs. NI Holdings | White Mountains vs. Donegal Group A | White Mountains vs. Donegal Group B | White Mountains vs. The Hanover Insurance |
| Cable One vs. Liberty Broadband Srs | Cable One vs. Liberty Broadband Corp | Cable One vs. Telkom Indonesia Tbk | Cable One vs. Liberty Global 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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