Correlation Between Confluent and Kinsale Capital

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

By analyzing existing cross correlation between Confluent and Kinsale Capital Group, you can compare the effects of market volatilities on Confluent and Kinsale Capital 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 Confluent with a short position of Kinsale Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Confluent and Kinsale Capital.

Diversification Opportunities for Confluent and Kinsale Capital

0.63

Correlation Coefficient

Confluent  Kinsale Capital

Poor diversification

The 3 months correlation between Confluent and Kinsale is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group and Confluent 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 Confluent are associated (or correlated) with Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of Confluent i.e., Confluent and Kinsale Capital go up and down completely randomly.

Pair Corralation between Confluent and Kinsale Capital

Given the investment horizon of 90 days Confluent is expected to generate 1.62 times more return on investment than Kinsale Capital. However, Confluent is 1.62 times more volatile than Kinsale Capital Group. It trades about 0.2 of its potential returns per unit of risk. Kinsale Capital Group is currently generating about 0.09 per unit of risk. If you would invest  2,075  in Confluent on September 14, 2024 and sell it today you would earn a total of  975.00  from holding Confluent or generate 46.99% return on investment over 90 days.

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

Confluent  vs.  Kinsale Capital Group

Confluent

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kinsale Capital Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Kinsale Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Confluent and Kinsale Capital

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

The idea behind Confluent and Kinsale Capital 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.