Correlation Between GREENLIGHT CAPRE and United Insurance

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

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

Diversification Opportunities for GREENLIGHT CAPRE and United Insurance

0.81

Correlation Coefficient

GREENLIGHT CAPRE  United Insurance

Very poor diversification

The 3 months correlation between GREENLIGHT and United is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GREENLIGHT CAPRE A and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings and GREENLIGHT CAPRE 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 GREENLIGHT CAPRE A are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of GREENLIGHT CAPRE i.e., GREENLIGHT CAPRE and United Insurance go up and down completely randomly.

Pair Corralation between GREENLIGHT CAPRE and United Insurance

Assuming the 90 days horizon GREENLIGHT CAPRE is expected to generate 6.07 times less return on investment than United Insurance. But when comparing it to its historical volatility, GREENLIGHT CAPRE A is 3.91 times less risky than United Insurance. It trades about 0.06 of its potential returns per unit of risk. United Insurance Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  158.00  in United Insurance Holdings on October 11, 2024 and sell it today you would earn a total of  1,022  from holding United Insurance Holdings or generate 646.84% return on investment over 90 days.

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

GREENLIGHT CAPRE A  vs.  United Insurance Holdings

GREENLIGHT CAPRE A

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GREENLIGHT CAPRE A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GREENLIGHT CAPRE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

United Insurance Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GREENLIGHT CAPRE and United Insurance

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

The idea behind GREENLIGHT CAPRE A and United Insurance 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..