Correlation Between Trupanion and Peoples Insurance

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

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

Diversification Opportunities for Trupanion and Peoples Insurance

-0.38

Correlation Coefficient

Trupanion  Peoples Insurance

Very good diversification

The 3 months correlation between Trupanion and Peoples is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion and The Peoples Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance and Trupanion 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 Trupanion are associated (or correlated) with Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance has no effect on the direction of Trupanion i.e., Trupanion and Peoples Insurance go up and down completely randomly.

Pair Corralation between Trupanion and Peoples Insurance

Given the investment horizon of 90 days Trupanion is expected to under-perform the Peoples Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Trupanion is 1.04 times less risky than Peoples Insurance. The stock trades about -0.04 of its potential returns per unit of risk. The The Peoples Insurance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  29.00  in The Peoples Insurance on October 22, 2024 and sell it today you would earn a total of  7.00  from holding The Peoples Insurance or generate 24.14% return on investment over 90 days.

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

Trupanion  vs.  The Peoples Insurance

Trupanion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trupanion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Peoples Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Peoples Insurance are ranked lower than 10 (%) 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.

Pair Trading with Trupanion and Peoples Insurance

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

The idea behind Trupanion and The Peoples Insurance 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.