Correlation Between STANDARD ALLIANCE and UNION HOMES

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

By analyzing existing cross correlation between STANDARD ALLIANCE INSURANCE and UNION HOMES REAL, you can compare the effects of market volatilities on STANDARD ALLIANCE and UNION HOMES 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 STANDARD ALLIANCE with a short position of UNION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANDARD ALLIANCE and UNION HOMES.

Diversification Opportunities for STANDARD ALLIANCE and UNION HOMES

1.0

Correlation Coefficient

STANDARD ALLIANCE  UNION HOMES

No risk reduction

The 3 months correlation between STANDARD and UNION is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding STANDARD ALLIANCE INSURANCE and UNION HOMES REAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNION HOMES REAL and STANDARD ALLIANCE 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 STANDARD ALLIANCE INSURANCE are associated (or correlated) with UNION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNION HOMES REAL has no effect on the direction of STANDARD ALLIANCE i.e., STANDARD ALLIANCE and UNION HOMES go up and down completely randomly.

Pair Corralation between STANDARD ALLIANCE and UNION HOMES

If you would invest  3,660  in UNION HOMES REAL on September 13, 2024 and sell it today you would earn a total of  0.00  from holding UNION HOMES REAL or generate 0.0% return on investment over 90 days.

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

STANDARD ALLIANCE INSURANCE  vs.  UNION HOMES REAL

STANDARD ALLIANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STANDARD ALLIANCE INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, STANDARD ALLIANCE is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

UNION HOMES REAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNION HOMES REAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, UNION HOMES is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with STANDARD ALLIANCE and UNION HOMES

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

The idea behind STANDARD ALLIANCE INSURANCE and UNION HOMES REAL 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.