Correlation Between United Fire and CVR Partners
Can any of the company-specific risk be diversified away by investing in both United Fire and CVR Partners 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 CVR Partners 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 CVR Partners LP, you can compare the effects of market volatilities on United Fire and CVR Partners 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 CVR Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and CVR Partners.
Diversification Opportunities for United Fire and CVR Partners
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and CVR is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP 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 CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of United Fire i.e., United Fire and CVR Partners go up and down completely randomly.
Pair Corralation between United Fire and CVR Partners
Given the investment horizon of 90 days United Fire Group is expected to under-perform the CVR Partners. In addition to that, United Fire is 1.27 times more volatile than CVR Partners LP. It trades about -0.01 of its total potential returns per unit of risk. CVR Partners LP is currently generating about 0.05 per unit of volatility. If you would invest 7,240 in CVR Partners LP on December 18, 2024 and sell it today you would earn a total of 321.00 from holding CVR Partners LP or generate 4.43% 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. CVR Partners LP
Performance |
Timeline |
United Fire Group |
CVR Partners LP |
United Fire and CVR Partners Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Fire and CVR Partners
The main advantage of trading using opposite United Fire and CVR Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, CVR Partners 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 CVR Partners will offset losses from the drop in CVR Partners' long position.United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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