Correlation Between American Scientf and United Fire

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

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

Diversification Opportunities for American Scientf and United Fire

0.23

Correlation Coefficient

American Scientf  United Fire

Modest diversification

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

Pair Corralation between American Scientf and United Fire

Given the investment horizon of 90 days American Scientf is expected to generate 150.71 times more return on investment than United Fire. However, American Scientf is 150.71 times more volatile than United Fire Group. It trades about 0.22 of its potential returns per unit of risk. United Fire Group is currently generating about -0.12 per unit of risk. If you would invest  0.00  in American Scientf on September 24, 2024 and sell it today you would earn a total of  0.01  from holding American Scientf or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

American Scientf  vs.  United Fire Group

American Scientf

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Scientf are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, American Scientf showed solid returns over the last few months and may actually be approaching a breakup point.

United Fire Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, United Fire unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Scientf and United Fire

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

The idea behind American Scientf and United Fire Group 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.