Correlation Between NI Holdings and United Fire
Can any of the company-specific risk be diversified away by investing in both NI Holdings 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 NI Holdings and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and United Fire Group, you can compare the effects of market volatilities on NI Holdings 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 NI Holdings with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and United Fire.
Diversification Opportunities for NI Holdings and United Fire
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NODK and United is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings 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 NI Holdings 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 NI Holdings 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 NI Holdings i.e., NI Holdings and United Fire go up and down completely randomly.
Pair Corralation between NI Holdings and United Fire
Given the investment horizon of 90 days NI Holdings is expected to under-perform the United Fire. But the stock apears to be less risky and, when comparing its historical volatility, NI Holdings is 1.28 times less risky than United Fire. The stock trades about -0.11 of its potential returns per unit of risk. The United Fire Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,832 in United Fire Group on December 27, 2024 and sell it today you would earn a total of 140.00 from holding United Fire Group or generate 4.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NI Holdings vs. United Fire Group
Performance |
Timeline |
NI Holdings |
United Fire Group |
NI Holdings and United Fire Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NI Holdings and United Fire
The main advantage of trading using opposite NI Holdings and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings 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.NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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