Correlation Between Dream Finders and United Fire

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dream Finders and United Fire 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 Dream Finders and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Finders HomesInc and United Fire Group, you can compare the effects of market volatilities on Dream Finders and United Fire 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 Dream Finders with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Finders and United Fire.

Diversification Opportunities for Dream Finders and United Fire

0.1
  Correlation Coefficient

Average diversification

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

Pair Corralation between Dream Finders and United Fire

Considering the 90-day investment horizon Dream Finders HomesInc is expected to generate 1.37 times more return on investment than United Fire. However, Dream Finders is 1.37 times more volatile than United Fire Group. It trades about 0.07 of its potential returns per unit of risk. United Fire Group is currently generating about -0.01 per unit of risk. If you would invest  1,681  in Dream Finders HomesInc on December 30, 2023 and sell it today you would earn a total of  2,692  from holding Dream Finders HomesInc or generate 160.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dream Finders HomesInc  vs.  United Fire Group

 Performance 
       Timeline  
Dream Finders HomesInc 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dream Finders HomesInc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Dream Finders demonstrated solid returns over the last few months and may actually be approaching a breakup point.
United Fire Group 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, United Fire may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Dream Finders and United Fire Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dream Finders and United Fire

The main advantage of trading using opposite Dream Finders and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Finders position performs unexpectedly, United Fire 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 United Fire will offset losses from the drop in United Fire's long position.
The idea behind Dream Finders HomesInc and United Fire Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Equity Valuation
Check real value of public entities based on technical and fundamental data
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Insider Screener
Find insiders across different sectors to evaluate their impact on performance