Correlation Between United Fire and HUNTINGTON

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

Diversification Opportunities for United Fire and HUNTINGTON

0.1

Correlation Coefficient

United Fire  HUNTINGTON

Average diversification

The 3 months correlation between United and HUNTINGTON is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and HUNTINGTON BANCSHARES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUNTINGTON BANCSHARES 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 HUNTINGTON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUNTINGTON BANCSHARES INC has no effect on the direction of United Fire i.e., United Fire and HUNTINGTON go up and down completely randomly.

Pair Corralation between United Fire and HUNTINGTON

Given the investment horizon of 90 days United Fire Group is expected to generate 8.96 times more return on investment than HUNTINGTON. However, United Fire is 8.96 times more volatile than HUNTINGTON BANCSHARES INC. It trades about 0.05 of its potential returns per unit of risk. HUNTINGTON BANCSHARES INC is currently generating about 0.02 per unit of risk. If you would invest  2,060  in United Fire Group on October 21, 2024 and sell it today you would earn a total of  606.00  from holding United Fire Group or generate 29.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.79%
Values	Daily Returns

United Fire Group  vs.  HUNTINGTON BANCSHARES INC

United Fire Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 10 (%) 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.

HUNTINGTON BANCSHARES INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with United Fire and HUNTINGTON

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

The idea behind United Fire Group and HUNTINGTON BANCSHARES 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..