Correlation Between VERISK ANLYTCS and GREENLIGHT CAP

Can any of the company-specific risk be diversified away by investing in both VERISK ANLYTCS and GREENLIGHT CAP 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 VERISK ANLYTCS and GREENLIGHT CAP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VERISK ANLYTCS A and GREENLIGHT CAP RE, you can compare the effects of market volatilities on VERISK ANLYTCS and GREENLIGHT CAP 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 VERISK ANLYTCS with a short position of GREENLIGHT CAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of VERISK ANLYTCS and GREENLIGHT CAP.

Diversification Opportunities for VERISK ANLYTCS and GREENLIGHT CAP

0.94

Correlation Coefficient

VERISK ANLYTCS  GREENLIGHT CAP

Almost no diversification

The 3 months correlation between VERISK and GREENLIGHT is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding VERISK ANLYTCS A and GREENLIGHT CAP RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENLIGHT CAP RE and VERISK ANLYTCS 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 VERISK ANLYTCS A are associated (or correlated) with GREENLIGHT CAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENLIGHT CAP RE has no effect on the direction of VERISK ANLYTCS i.e., VERISK ANLYTCS and GREENLIGHT CAP go up and down completely randomly.

Pair Corralation between VERISK ANLYTCS and GREENLIGHT CAP

Assuming the 90 days trading horizon VERISK ANLYTCS is expected to generate 1.08 times less return on investment than GREENLIGHT CAP. But when comparing it to its historical volatility, VERISK ANLYTCS A is 1.84 times less risky than GREENLIGHT CAP. It trades about 0.16 of its potential returns per unit of risk. GREENLIGHT CAP RE is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,210  in GREENLIGHT CAP RE on October 8, 2024 and sell it today you would earn a total of  120.00  from holding GREENLIGHT CAP RE or generate 9.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

VERISK ANLYTCS A  vs.  GREENLIGHT CAP RE

VERISK ANLYTCS A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VERISK ANLYTCS A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, VERISK ANLYTCS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GREENLIGHT CAP RE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GREENLIGHT CAP RE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, GREENLIGHT CAP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VERISK ANLYTCS and GREENLIGHT CAP

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

The idea behind VERISK ANLYTCS A and GREENLIGHT CAP RE 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.