Correlation Between White Mountains and PICC Property
Can any of the company-specific risk be diversified away by investing in both White Mountains and PICC Property 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 PICC Property 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 PICC Property and, you can compare the effects of market volatilities on White Mountains and PICC Property 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 PICC Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Mountains and PICC Property.
Diversification Opportunities for White Mountains and PICC Property
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between White and PICC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and PICC Property and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICC Property 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 PICC Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICC Property has no effect on the direction of White Mountains i.e., White Mountains and PICC Property go up and down completely randomly.
Pair Corralation between White Mountains and PICC Property
Considering the 90-day investment horizon White Mountains Insurance is expected to generate 0.37 times more return on investment than PICC Property. However, White Mountains Insurance is 2.7 times less risky than PICC Property. It trades about 0.31 of its potential returns per unit of risk. PICC Property and is currently generating about -0.04 per unit of risk. If you would invest 181,487 in White Mountains Insurance on August 27, 2024 and sell it today you would earn a total of 20,013 from holding White Mountains Insurance or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
White Mountains Insurance vs. PICC Property and
Performance |
| Timeline |
| White Mountains Insurance |
| PICC Property |
White Mountains and PICC Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with White Mountains and PICC Property
The main advantage of trading using opposite White Mountains and PICC Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains position performs unexpectedly, PICC Property 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 PICC Property will offset losses from the drop in PICC Property'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 |
| PICC Property vs. Progressive Corp | PICC Property vs. White Mountains Insurance | PICC Property vs. Chubb | PICC Property vs. W R Berkley |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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