Correlation Between White Mountains and Seaboard
Can any of the company-specific risk be diversified away by investing in both White Mountains and Seaboard 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 Seaboard 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 Seaboard, you can compare the effects of market volatilities on White Mountains and Seaboard 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 Seaboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Mountains and Seaboard.
Diversification Opportunities for White Mountains and Seaboard
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between White and Seaboard is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard 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 Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of White Mountains i.e., White Mountains and Seaboard go up and down completely randomly.
Pair Corralation between White Mountains and Seaboard
Considering the 90-day investment horizon White Mountains Insurance is expected to under-perform the Seaboard. In addition to that, White Mountains is 1.17 times more volatile than Seaboard. It trades about -0.06 of its total potential returns per unit of risk. Seaboard is currently generating about 0.04 per unit of volatility. If you would invest 245,390 in Seaboard on October 20, 2024 and sell it today you would earn a total of 2,064 from holding Seaboard or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
White Mountains Insurance vs. Seaboard
Performance |
| Timeline |
| White Mountains Insurance |
| Seaboard |
White Mountains and Seaboard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with White Mountains and Seaboard
The main advantage of trading using opposite White Mountains and Seaboard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains position performs unexpectedly, Seaboard 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 Seaboard will offset losses from the drop in Seaboard'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 |
| Seaboard vs. White Mountains Insurance | Seaboard vs. Cable One | Seaboard vs. NVR Inc | Seaboard vs. Alexanders |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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