Correlation Between Pinterest and United Fire

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

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

Diversification Opportunities for Pinterest and United Fire

-0.45

Correlation Coefficient

Pinterest  United Fire

Very good diversification

The 3 months correlation between Pinterest and United is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest 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 Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and United Fire go up and down completely randomly.

Pair Corralation between Pinterest and United Fire

Given the investment horizon of 90 days Pinterest is expected to under-perform the United Fire. But the stock apears to be less risky and, when comparing its historical volatility, Pinterest is 1.01 times less risky than United Fire. The stock trades about -0.01 of its potential returns per unit of risk. The United Fire Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,064  in United Fire Group on September 4, 2024 and sell it today you would earn a total of  1,002  from holding United Fire Group or generate 48.55% return on investment over 90 days.

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

Pinterest  vs.  United Fire Group

Pinterest

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

United Fire Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, United Fire unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinterest and United Fire

The main advantage of trading using opposite Pinterest and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest 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.

The idea behind Pinterest and United Fire Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..