Correlation Between Heritage Insurance and Kemper

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

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

Diversification Opportunities for Heritage Insurance and Kemper

0.49

Correlation Coefficient

Heritage Insurance  Kemper

Very weak diversification

The 3 months correlation between Heritage and Kemper is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Insurance Hldgs and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and Heritage Insurance 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 Heritage Insurance Hldgs are associated (or correlated) with Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Heritage Insurance i.e., Heritage Insurance and Kemper go up and down completely randomly.

Pair Corralation between Heritage Insurance and Kemper

Given the investment horizon of 90 days Heritage Insurance Hldgs is expected to generate 1.93 times more return on investment than Kemper. However, Heritage Insurance is 1.93 times more volatile than Kemper. It trades about 0.13 of its potential returns per unit of risk. Kemper is currently generating about 0.03 per unit of risk. If you would invest  1,190  in Heritage Insurance Hldgs on December 29, 2024 and sell it today you would earn a total of  285.00  from holding Heritage Insurance Hldgs or generate 23.95% return on investment over 90 days.

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

Heritage Insurance Hldgs  vs.  Kemper

Heritage Insurance Hldgs

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Insurance Hldgs are ranked lower than 10 (%) 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.

Kemper

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kemper is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Heritage Insurance and Kemper

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

The idea behind Heritage Insurance Hldgs and Kemper 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.