Correlation Between Hippo Holdings and James River

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

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

Diversification Opportunities for Hippo Holdings and James River

-0.77

Correlation Coefficient

Hippo Holdings  James River

Pay attention - limited upside

The 3 months correlation between Hippo and James is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hippo Holdings and James River Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James River Group and Hippo Holdings 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 Hippo Holdings are associated (or correlated) with James River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James River Group has no effect on the direction of Hippo Holdings i.e., Hippo Holdings and James River go up and down completely randomly.

Pair Corralation between Hippo Holdings and James River

Given the investment horizon of 90 days Hippo Holdings is expected to generate 1.08 times more return on investment than James River. However, Hippo Holdings is 1.08 times more volatile than James River Group. It trades about 0.41 of its potential returns per unit of risk. James River Group is currently generating about -0.18 per unit of risk. If you would invest  1,893  in Hippo Holdings on August 30, 2024 and sell it today you would earn a total of  1,398  from holding Hippo Holdings or generate 73.85% return on investment over 90 days.

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

Hippo Holdings  vs.  James River Group

Hippo Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hippo Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Hippo Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

James River Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days James River Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Hippo Holdings and James River

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

The idea behind Hippo Holdings and James River 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.