Correlation Between United Insurance and Prestige Consumer

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

Diversification Opportunities for United Insurance and Prestige Consumer

0.67

Correlation Coefficient

United Insurance  Prestige Consumer

Poor diversification

The 3 months correlation between United and Prestige is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Prestige Consumer Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Consumer 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 Prestige Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Consumer has no effect on the direction of United Insurance i.e., United Insurance and Prestige Consumer go up and down completely randomly.

Pair Corralation between United Insurance and Prestige Consumer

If you would invest  0.00  in Prestige Consumer Healthcare on October 27, 2024 and sell it today you would earn a total of  0.00  from holding Prestige Consumer Healthcare or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.26%
Values	Daily Returns

United Insurance Holdings  vs.  Prestige Consumer Healthcare

United Insurance Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Prestige Consumer

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Prestige Consumer Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Prestige Consumer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with United Insurance and Prestige Consumer

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

The idea behind United Insurance Holdings and Prestige Consumer Healthcare 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.