Correlation Between United Fire and Pinterest

Can any of the company-specific risk be diversified away by investing in both United Fire and Pinterest 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 Pinterest 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 Pinterest, you can compare the effects of market volatilities on United Fire and Pinterest 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 Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Pinterest.

Diversification Opportunities for United Fire and Pinterest

-0.38

Correlation Coefficient

United Fire  Pinterest

Very good diversification

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

Pair Corralation between United Fire and Pinterest

Given the investment horizon of 90 days United Fire is expected to generate 2.26 times less return on investment than Pinterest. But when comparing it to its historical volatility, United Fire Group is 1.87 times less risky than Pinterest. It trades about 0.05 of its potential returns per unit of risk. Pinterest is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,915  in Pinterest on December 29, 2024 and sell it today you would earn a total of  309.00  from holding Pinterest or generate 10.6% return on investment over 90 days.

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

United Fire Group  vs.  Pinterest

United Fire Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, United Fire may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pinterest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Pinterest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Fire and Pinterest

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

The idea behind United Fire Group and Pinterest 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.