Correlation Between Grays Leasing and Premier Insurance

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

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

Diversification Opportunities for Grays Leasing and Premier Insurance

-0.03

Correlation Coefficient

Grays Leasing  Premier Insurance

Good diversification

The 3 months correlation between Grays and Premier is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grays Leasing and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance and Grays Leasing 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 Grays Leasing are associated (or correlated) with Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of Grays Leasing i.e., Grays Leasing and Premier Insurance go up and down completely randomly.

Pair Corralation between Grays Leasing and Premier Insurance

Assuming the 90 days trading horizon Grays Leasing is expected to generate 1.43 times more return on investment than Premier Insurance. However, Grays Leasing is 1.43 times more volatile than Premier Insurance. It trades about 0.33 of its potential returns per unit of risk. Premier Insurance is currently generating about 0.05 per unit of risk. If you would invest  432.00  in Grays Leasing on September 27, 2024 and sell it today you would earn a total of  187.00  from holding Grays Leasing or generate 43.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Grays Leasing  vs.  Premier Insurance

Grays Leasing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grays Leasing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grays Leasing sustained solid returns over the last few months and may actually be approaching a breakup point.

Premier Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grays Leasing and Premier Insurance

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

The idea behind Grays Leasing and Premier Insurance 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.