Correlation Between United Fire and Tuxis

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

Diversification Opportunities for United Fire and Tuxis

-0.56

Correlation Coefficient

United Fire  Tuxis

Excellent diversification

The 3 months correlation between United and Tuxis is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Tuxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuxis 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 Tuxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuxis has no effect on the direction of United Fire i.e., United Fire and Tuxis go up and down completely randomly.

Pair Corralation between United Fire and Tuxis

If you would invest  230.00  in Tuxis on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Tuxis or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

United Fire Group  vs.  Tuxis

United Fire Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, United Fire unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tuxis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tuxis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tuxis is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Fire and Tuxis

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

The idea behind United Fire Group and Tuxis 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.