Correlation Between Conifer Holding and Heritage Insurance

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

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

Diversification Opportunities for Conifer Holding and Heritage Insurance

0.09

Correlation Coefficient

Conifer Holding  Heritage Insurance

Significant diversification

The 3 months correlation between Conifer and Heritage is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Conifer Holding and Heritage Insurance Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Insurance Hldgs and Conifer Holding 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 Conifer Holding are associated (or correlated) with Heritage Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Insurance Hldgs has no effect on the direction of Conifer Holding i.e., Conifer Holding and Heritage Insurance go up and down completely randomly.

Pair Corralation between Conifer Holding and Heritage Insurance

Given the investment horizon of 90 days Conifer Holding is expected to under-perform the Heritage Insurance. In addition to that, Conifer Holding is 1.14 times more volatile than Heritage Insurance Hldgs. It trades about -0.1 of its total potential returns per unit of risk. Heritage Insurance Hldgs is currently generating about 0.02 per unit of volatility. If you would invest  1,179  in Heritage Insurance Hldgs on October 10, 2024 and sell it today you would earn a total of  6.00  from holding Heritage Insurance Hldgs or generate 0.51% return on investment over 90 days.

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

Conifer Holding  vs.  Heritage Insurance Hldgs

Conifer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conifer Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Conifer Holding is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Heritage Insurance Hldgs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Insurance Hldgs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Heritage Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Conifer Holding and Heritage Insurance

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

The idea behind Conifer Holding and Heritage Insurance Hldgs 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.