Correlation Between Marine Products and United Fire
Can any of the company-specific risk be diversified away by investing in both Marine Products and United Fire 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 Marine Products and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marine Products and United Fire Group, you can compare the effects of market volatilities on Marine Products and United Fire 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 Marine Products with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and United Fire.
Diversification Opportunities for Marine Products and United Fire
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marine and United is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group and Marine Products 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 Marine Products are associated (or correlated) with United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of Marine Products i.e., Marine Products and United Fire go up and down completely randomly.
Pair Corralation between Marine Products and United Fire
Considering the 90-day investment horizon Marine Products is expected to generate 1.05 times more return on investment than United Fire. However, Marine Products is 1.05 times more volatile than United Fire Group. It trades about -0.08 of its potential returns per unit of risk. United Fire Group is currently generating about -0.11 per unit of risk. If you would invest 941.00 in Marine Products on December 5, 2024 and sell it today you would lose (95.00) from holding Marine Products or give up 10.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Marine Products vs. United Fire Group
Performance |
Timeline |
Marine Products |
United Fire Group |
Marine Products and United Fire Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marine Products and United Fire
The main advantage of trading using opposite Marine Products and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products position performs unexpectedly, United Fire 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 United Fire will offset losses from the drop in United Fire's long position.Marine Products vs. Thor Industries | Marine Products vs. BRP Inc | Marine Products vs. Brunswick | Marine Products vs. EZGO Technologies |
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Check out your portfolio center.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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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