Correlation Between HCI and Horace Mann

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

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

Diversification Opportunities for HCI and Horace Mann

0.66

Correlation Coefficient

HCI  Horace Mann

Poor diversification

The 3 months correlation between HCI and Horace is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding HCI Group and Horace Mann Educators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horace Mann Educators and HCI 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 HCI Group are associated (or correlated) with Horace Mann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horace Mann Educators has no effect on the direction of HCI i.e., HCI and Horace Mann go up and down completely randomly.

Pair Corralation between HCI and Horace Mann

Considering the 90-day investment horizon HCI Group is expected to generate 1.23 times more return on investment than Horace Mann. However, HCI is 1.23 times more volatile than Horace Mann Educators. It trades about 0.16 of its potential returns per unit of risk. Horace Mann Educators is currently generating about 0.1 per unit of risk. If you would invest  11,702  in HCI Group on December 27, 2024 and sell it today you would earn a total of  2,345  from holding HCI Group or generate 20.04% return on investment over 90 days.

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

HCI Group  vs.  Horace Mann Educators

HCI Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HCI Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, HCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Horace Mann Educators

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horace Mann Educators are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Horace Mann may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HCI and Horace Mann

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

The idea behind HCI Group and Horace Mann Educators 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.