Correlation Between Everest and Maiden Holdings

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

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

Diversification Opportunities for Everest and Maiden Holdings

-0.09

Correlation Coefficient

Everest  Maiden Holdings

Good diversification

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

Pair Corralation between Everest and Maiden Holdings

Allowing for the 90-day total investment horizon Everest Group is expected to generate 0.42 times more return on investment than Maiden Holdings. However, Everest Group is 2.39 times less risky than Maiden Holdings. It trades about 0.02 of its potential returns per unit of risk. Maiden Holdings is currently generating about 0.0 per unit of risk. If you would invest  32,198  in Everest Group on September 12, 2024 and sell it today you would earn a total of  3,920  from holding Everest Group or generate 12.17% return on investment over 90 days.

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

Everest Group  vs.  Maiden Holdings

Everest Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everest Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Everest and Maiden Holdings

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

The idea behind Everest Group and Maiden 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.