Correlation Between Rush Enterprises and Kingsway Financial

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

By analyzing existing cross correlation between Rush Enterprises A and Kingsway Financial Services, you can compare the effects of market volatilities on Rush Enterprises and Kingsway Financial 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 Rush Enterprises with a short position of Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Enterprises and Kingsway Financial.

Diversification Opportunities for Rush Enterprises and Kingsway Financial

0.33

Correlation Coefficient

Rush Enterprises  Kingsway Financial

Weak diversification

The 3 months correlation between Rush and Kingsway is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Rush Enterprises A and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial and Rush Enterprises 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 Rush Enterprises A are associated (or correlated) with Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Rush Enterprises i.e., Rush Enterprises and Kingsway Financial go up and down completely randomly.

Pair Corralation between Rush Enterprises and Kingsway Financial

Assuming the 90 days horizon Rush Enterprises A is expected to generate 1.41 times more return on investment than Kingsway Financial. However, Rush Enterprises is 1.41 times more volatile than Kingsway Financial Services. It trades about 0.03 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.18 per unit of risk. If you would invest  5,894  in Rush Enterprises A on November 19, 2024 and sell it today you would earn a total of  153.00  from holding Rush Enterprises A or generate 2.6% return on investment over 90 days.

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

Rush Enterprises A  vs.  Kingsway Financial Services

Rush Enterprises A

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Enterprises A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Rush Enterprises is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Kingsway Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingsway Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Rush Enterprises and Kingsway Financial

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

The idea behind Rush Enterprises A and Kingsway Financial Services 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.