Correlation Between United Fire and Corpay

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

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

Diversification Opportunities for United Fire and Corpay

-0.69

Correlation Coefficient

United Fire  Corpay

Excellent diversification

The 3 months correlation between United and Corpay is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Corpay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corpay Inc and United Fire 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 United Fire Group are associated (or correlated) with Corpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corpay Inc has no effect on the direction of United Fire i.e., United Fire and Corpay go up and down completely randomly.

Pair Corralation between United Fire and Corpay

Given the investment horizon of 90 days United Fire is expected to generate 2.06 times less return on investment than Corpay. In addition to that, United Fire is 1.09 times more volatile than Corpay Inc. It trades about 0.02 of its total potential returns per unit of risk. Corpay Inc is currently generating about 0.04 per unit of volatility. If you would invest  34,528  in Corpay Inc on December 25, 2024 and sell it today you would earn a total of  1,267  from holding Corpay Inc or generate 3.67% return on investment over 90 days.

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

United Fire Group  vs.  Corpay Inc

United Fire Group

Risk-Adjusted Performance

Weak

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

Corpay Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corpay Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Corpay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Fire and Corpay

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

The idea behind United Fire Group and Corpay Inc 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.