Correlation Between Kinsale Capital and Western Sierra

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

Diversification Opportunities for Kinsale Capital and Western Sierra

0.43

Correlation Coefficient

Kinsale Capital  Western Sierra

Very weak diversification

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

Pair Corralation between Kinsale Capital and Western Sierra

Given the investment horizon of 90 days Kinsale Capital Group is expected to under-perform the Western Sierra. But the stock apears to be less risky and, when comparing its historical volatility, Kinsale Capital Group is 59.04 times less risky than Western Sierra. The stock trades about -0.12 of its potential returns per unit of risk. The Western Sierra Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.68  in Western Sierra Mining on November 29, 2024 and sell it today you would lose (0.65) from holding Western Sierra Mining or give up 95.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Kinsale Capital Group  vs.  Western Sierra Mining

Kinsale Capital Group

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Western Sierra Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Sierra Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Western Sierra exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinsale Capital and Western Sierra

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

The idea behind Kinsale Capital Group and Western Sierra Mining 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.