Correlation Between Peoples Insurance and Trupanion

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

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

Diversification Opportunities for Peoples Insurance and Trupanion

-0.29

Correlation Coefficient

Peoples Insurance  Trupanion

Very good diversification

The 3 months correlation between Peoples and Trupanion is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Peoples Insurance and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion and Peoples Insurance 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 The Peoples Insurance are associated (or correlated) with Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of Peoples Insurance i.e., Peoples Insurance and Trupanion go up and down completely randomly.

Pair Corralation between Peoples Insurance and Trupanion

Assuming the 90 days horizon The Peoples Insurance is expected to generate 1.47 times more return on investment than Trupanion. However, Peoples Insurance is 1.47 times more volatile than Trupanion. It trades about 0.13 of its potential returns per unit of risk. Trupanion is currently generating about -0.09 per unit of risk. If you would invest  36.00  in The Peoples Insurance on December 23, 2024 and sell it today you would earn a total of  18.00  from holding The Peoples Insurance or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

The Peoples Insurance  vs.  Trupanion

Peoples Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Peoples Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Peoples Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Trupanion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trupanion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Peoples Insurance and Trupanion

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

The idea behind The Peoples Insurance and Trupanion 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 Stocks Directory module to find actively traded stocks across global markets.