Correlation Between United Fire and 784730AB9

Can any of the company-specific risk be diversified away by investing in both United Fire and 784730AB9 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 784730AB9 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 US784730AB94, you can compare the effects of market volatilities on United Fire and 784730AB9 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 784730AB9. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and 784730AB9.

Diversification Opportunities for United Fire and 784730AB9

0.53

Correlation Coefficient

United Fire  784730AB9

Very weak diversification

The 3 months correlation between United and 784730AB9 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and US784730AB94 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US784730AB94 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 784730AB9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US784730AB94 has no effect on the direction of United Fire i.e., United Fire and 784730AB9 go up and down completely randomly.

Pair Corralation between United Fire and 784730AB9

Given the investment horizon of 90 days United Fire Group is expected to generate 0.99 times more return on investment than 784730AB9. However, United Fire Group is 1.01 times less risky than 784730AB9. It trades about 0.17 of its potential returns per unit of risk. US784730AB94 is currently generating about 0.05 per unit of risk. If you would invest  1,942  in United Fire Group on October 9, 2024 and sell it today you would earn a total of  793.00  from holding United Fire Group or generate 40.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	32.79%
Values	Daily Returns

United Fire Group  vs.  US784730AB94

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.

US784730AB94

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US784730AB94 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 784730AB9 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Fire and 784730AB9

The main advantage of trading using opposite United Fire and 784730AB9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, 784730AB9 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 784730AB9 will offset losses from the drop in 784730AB9's long position.

The idea behind United Fire Group and US784730AB94 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.