Correlation Between United Insurance and Corporate Office

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

Diversification Opportunities for United Insurance and Corporate Office

0.68

Correlation Coefficient

United Insurance  Corporate Office

Poor diversification

The 3 months correlation between United and Corporate is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of United Insurance i.e., United Insurance and Corporate Office go up and down completely randomly.

Pair Corralation between United Insurance and Corporate Office

Assuming the 90 days horizon United Insurance Holdings is expected to generate 3.63 times more return on investment than Corporate Office. However, United Insurance is 3.63 times more volatile than Corporate Office Properties. It trades about 0.14 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.23 per unit of risk. If you would invest  960.00  in United Insurance Holdings on September 12, 2024 and sell it today you would earn a total of  360.00  from holding United Insurance Holdings or generate 37.5% return on investment over 90 days.

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

United Insurance Holdings  vs.  Corporate Office Properties

United Insurance Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 10 (%) 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.

Corporate Office Pro

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Office Properties are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corporate Office reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Insurance and Corporate Office

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

The idea behind United Insurance Holdings and Corporate Office Properties 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 Transaction History module to view history of all your transactions and understand their impact on performance.