Correlation Between RLI Corp and Kemper

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

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

Diversification Opportunities for RLI Corp and Kemper

-0.17

Correlation Coefficient

RLI Corp  Kemper

Good diversification

The 3 months correlation between RLI and Kemper is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding RLI Corp and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and RLI Corp 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 RLI Corp are associated (or correlated) with Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of RLI Corp i.e., RLI Corp and Kemper go up and down completely randomly.

Pair Corralation between RLI Corp and Kemper

Considering the 90-day investment horizon RLI Corp is expected to under-perform the Kemper. But the stock apears to be less risky and, when comparing its historical volatility, RLI Corp is 1.01 times less risky than Kemper. The stock trades about -0.04 of its potential returns per unit of risk. The Kemper is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,487  in Kemper on December 27, 2024 and sell it today you would earn a total of  284.00  from holding Kemper or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

RLI Corp  vs.  Kemper

RLI Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days RLI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, RLI Corp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Kemper

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kemper is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with RLI Corp and Kemper

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

The idea behind RLI Corp and Kemper 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.