Correlation Between Kinsale Capital and Westrock Coffee

Can any of the company-specific risk be diversified away by investing in both Kinsale Capital and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee, you can compare the effects of market volatilities on Kinsale Capital and Westrock Coffee 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 Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinsale Capital and Westrock Coffee.

Diversification Opportunities for Kinsale Capital and Westrock Coffee

0.43

Correlation Coefficient

Kinsale Capital  Westrock Coffee

Very weak diversification

The 3 months correlation between Kinsale and Westrock is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital Group and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Kinsale Capital i.e., Kinsale Capital and Westrock Coffee go up and down completely randomly.

Pair Corralation between Kinsale Capital and Westrock Coffee

Given the investment horizon of 90 days Kinsale Capital Group is expected to generate 0.58 times more return on investment than Westrock Coffee. However, Kinsale Capital Group is 1.74 times less risky than Westrock Coffee. It trades about 0.04 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.02 per unit of risk. If you would invest  44,931  in Kinsale Capital Group on September 24, 2024 and sell it today you would earn a total of  1,700  from holding Kinsale Capital Group or generate 3.78% 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.  Westrock Coffee

Kinsale Capital Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Westrock Coffee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Westrock Coffee is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kinsale Capital and Westrock Coffee

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

The idea behind Kinsale Capital Group and Westrock Coffee 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.