Correlation Between United Insurance and Hermès International

Can any of the company-specific risk be diversified away by investing in both United Insurance and Hermès International 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 Hermès International 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 Herms International Socit, you can compare the effects of market volatilities on United Insurance and Hermès International 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 Hermès International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Hermès International.

Diversification Opportunities for United Insurance and Hermès International

-0.23

Correlation Coefficient

United Insurance  Hermès International

Very good diversification

The 3 months correlation between United and Hermès is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Herms International Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herms International Socit 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 Hermès International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herms International Socit has no effect on the direction of United Insurance i.e., United Insurance and Hermès International go up and down completely randomly.

Pair Corralation between United Insurance and Hermès International

Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the Hermès International. In addition to that, United Insurance is 1.27 times more volatile than Herms International Socit. It trades about -0.09 of its total potential returns per unit of risk. Herms International Socit is currently generating about 0.08 per unit of volatility. If you would invest  231,517  in Herms International Socit on December 24, 2024 and sell it today you would earn a total of  18,083  from holding Herms International Socit or generate 7.81% return on investment over 90 days.

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

United Insurance Holdings  vs.  Herms International Socit

United Insurance Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Insurance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Herms International Socit

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Herms International Socit are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hermès International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with United Insurance and Hermès International

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

The idea behind United Insurance Holdings and Herms International Socit 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.