Correlation Between AMERISAFE and Hippo Holdings

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

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

Diversification Opportunities for AMERISAFE and Hippo Holdings

0.57

Correlation Coefficient

AMERISAFE  Hippo Holdings

Very weak diversification

The 3 months correlation between AMERISAFE and Hippo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding AMERISAFE and Hippo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hippo Holdings and AMERISAFE 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 AMERISAFE are associated (or correlated) with Hippo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hippo Holdings has no effect on the direction of AMERISAFE i.e., AMERISAFE and Hippo Holdings go up and down completely randomly.

Pair Corralation between AMERISAFE and Hippo Holdings

Given the investment horizon of 90 days AMERISAFE is expected to under-perform the Hippo Holdings. But the stock apears to be less risky and, when comparing its historical volatility, AMERISAFE is 2.34 times less risky than Hippo Holdings. The stock trades about -0.14 of its potential returns per unit of risk. The Hippo Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,116  in Hippo Holdings on December 1, 2024 and sell it today you would lose (317.00) from holding Hippo Holdings or give up 10.17% of portfolio value over 90 days.

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

AMERISAFE  vs.  Hippo Holdings

AMERISAFE

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMERISAFE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

Hippo Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hippo Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with AMERISAFE and Hippo Holdings

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

The idea behind AMERISAFE and Hippo Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.