Correlation Between Union Insurance and Eagle Cold

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

By analyzing existing cross correlation between Union Insurance Co and Eagle Cold Storage, you can compare the effects of market volatilities on Union Insurance and Eagle Cold 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 Union Insurance with a short position of Eagle Cold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Insurance and Eagle Cold.

Diversification Opportunities for Union Insurance and Eagle Cold

0.26

Correlation Coefficient

Union Insurance  Eagle Cold

Modest diversification

The 3 months correlation between Union and Eagle is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Union Insurance Co and Eagle Cold Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Cold Storage and Union 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 Union Insurance Co are associated (or correlated) with Eagle Cold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Cold Storage has no effect on the direction of Union Insurance i.e., Union Insurance and Eagle Cold go up and down completely randomly.

Pair Corralation between Union Insurance and Eagle Cold

Assuming the 90 days trading horizon Union Insurance is expected to generate 1.63 times less return on investment than Eagle Cold. In addition to that, Union Insurance is 1.18 times more volatile than Eagle Cold Storage. It trades about 0.11 of its total potential returns per unit of risk. Eagle Cold Storage is currently generating about 0.2 per unit of volatility. If you would invest  2,960  in Eagle Cold Storage on December 2, 2024 and sell it today you would earn a total of  250.00  from holding Eagle Cold Storage or generate 8.45% return on investment over 90 days.

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

Union Insurance Co  vs.  Eagle Cold Storage

Union Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Union Insurance Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Union Insurance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Eagle Cold Storage

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Cold Storage are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eagle Cold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Union Insurance and Eagle Cold

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

The idea behind Union Insurance Co and Eagle Cold Storage 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.