Correlation Between United Insurance and Gaming

Can any of the company-specific risk be diversified away by investing in both United Insurance and Gaming 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 United Insurance and Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Insurance Holdings and Gaming and Leisure, you can compare the effects of market volatilities on United Insurance and Gaming 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 United Insurance with a short position of Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Gaming.

Diversification Opportunities for United Insurance and Gaming

0.53

Correlation Coefficient

United Insurance  Gaming

Very weak diversification

The 3 months correlation between United and Gaming is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure and United Insurance 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 United Insurance Holdings are associated (or correlated) with Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of United Insurance i.e., United Insurance and Gaming go up and down completely randomly.

Pair Corralation between United Insurance and Gaming

Assuming the 90 days horizon United Insurance Holdings is expected to generate 2.4 times more return on investment than Gaming. However, United Insurance is 2.4 times more volatile than Gaming and Leisure. It trades about -0.04 of its potential returns per unit of risk. Gaming and Leisure is currently generating about -0.12 per unit of risk. If you would invest  1,267  in United Insurance Holdings on October 10, 2024 and sell it today you would lose (37.00) from holding United Insurance Holdings or give up 2.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

United Insurance Holdings  vs.  Gaming and Leisure

United Insurance Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Gaming and Leisure

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming and Leisure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United Insurance and Gaming

The main advantage of trading using opposite United Insurance and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.

The idea behind United Insurance Holdings and Gaming and Leisure 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.

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.