Correlation Between United Fire and EXPEDIA

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

Diversification Opportunities for United Fire and EXPEDIA

-0.3

Correlation Coefficient

United Fire  EXPEDIA

Very good diversification

The 3 months correlation between United and EXPEDIA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and EXPEDIA GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPEDIA GROUP 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 EXPEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPEDIA GROUP INC has no effect on the direction of United Fire i.e., United Fire and EXPEDIA go up and down completely randomly.

Pair Corralation between United Fire and EXPEDIA

Given the investment horizon of 90 days United Fire Group is expected to generate 5.77 times more return on investment than EXPEDIA. However, United Fire is 5.77 times more volatile than EXPEDIA GROUP INC. It trades about 0.0 of its potential returns per unit of risk. EXPEDIA GROUP INC is currently generating about 0.01 per unit of risk. If you would invest  2,894  in United Fire Group on December 24, 2024 and sell it today you would lose (18.00) from holding United Fire Group or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

United Fire Group  vs.  EXPEDIA GROUP INC

United Fire Group

Risk-Adjusted Performance

Weak

Over the last 90 days United Fire Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

EXPEDIA GROUP INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EXPEDIA GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EXPEDIA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Fire and EXPEDIA

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

The idea behind United Fire Group and EXPEDIA GROUP 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.