Correlation Between Kinsale Capital and Confluent

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

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

Diversification Opportunities for Kinsale Capital and Confluent

0.5

Correlation Coefficient

Kinsale Capital  Confluent

Very weak diversification

The 3 months correlation between Kinsale and Confluent is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital Group and Confluent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Confluent and Kinsale Capital 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 Kinsale Capital Group are associated (or correlated) with Confluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Confluent has no effect on the direction of Kinsale Capital i.e., Kinsale Capital and Confluent go up and down completely randomly.

Pair Corralation between Kinsale Capital and Confluent

Given the investment horizon of 90 days Kinsale Capital Group is expected to under-perform the Confluent. But the stock apears to be less risky and, when comparing its historical volatility, Kinsale Capital Group is 1.56 times less risky than Confluent. The stock trades about -0.08 of its potential returns per unit of risk. The Confluent is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,223  in Confluent on October 11, 2024 and sell it today you would earn a total of  643.00  from holding Confluent or generate 28.92% return on investment over 90 days.

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

Kinsale Capital Group  vs.  Confluent

Kinsale Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinsale Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Confluent

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinsale Capital and Confluent

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

The idea behind Kinsale Capital Group and Confluent 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.