Correlation Between United Insurance and Intesa Sanpaolo
Can any of the company-specific risk be diversified away by investing in both United Insurance and Intesa Sanpaolo 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 Insurance and Intesa Sanpaolo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and Intesa Sanpaolo SpA, you can compare the effects of market volatilities on United Insurance and Intesa Sanpaolo 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 Insurance with a short position of Intesa Sanpaolo. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Intesa Sanpaolo.
Diversification Opportunities for United Insurance and Intesa Sanpaolo
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Intesa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Intesa Sanpaolo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intesa Sanpaolo SpA and United Insurance 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 Insurance Holdings are associated (or correlated) with Intesa Sanpaolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intesa Sanpaolo SpA has no effect on the direction of United Insurance i.e., United Insurance and Intesa Sanpaolo go up and down completely randomly.
Pair Corralation between United Insurance and Intesa Sanpaolo
Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the Intesa Sanpaolo. In addition to that, United Insurance is 1.46 times more volatile than Intesa Sanpaolo SpA. It trades about -0.4 of its total potential returns per unit of risk. Intesa Sanpaolo SpA is currently generating about -0.26 per unit of volatility. If you would invest 353.00 in Intesa Sanpaolo SpA on March 21, 2024 and sell it today you would lose (23.00) from holding Intesa Sanpaolo SpA or give up 6.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 77.27% |
Values | Daily Returns |
United Insurance Holdings vs. Intesa Sanpaolo SpA
Performance |
Timeline |
United Insurance Holdings |
Intesa Sanpaolo SpA |
United Insurance and Intesa Sanpaolo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Insurance and Intesa Sanpaolo
The main advantage of trading using opposite United Insurance and Intesa Sanpaolo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Intesa Sanpaolo 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 Intesa Sanpaolo will offset losses from the drop in Intesa Sanpaolo's long position.The idea behind United Insurance Holdings and Intesa Sanpaolo SpA 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.Intesa Sanpaolo vs. BNP Paribas SA | Intesa Sanpaolo vs. NMI Holdings | Intesa Sanpaolo vs. SIVERS SEMICONDUCTORS AB | Intesa Sanpaolo vs. NorAm Drilling AS |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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