Correlation Between Hiscox and Real Estate

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

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

Diversification Opportunities for Hiscox and Real Estate

0.82

Correlation Coefficient

Hiscox  Real Estate

Very poor diversification

The 3 months correlation between Hiscox and Real is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hiscox and Real Estate Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Investors and Hiscox 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 Hiscox are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Investors has no effect on the direction of Hiscox i.e., Hiscox and Real Estate go up and down completely randomly.

Pair Corralation between Hiscox and Real Estate

Assuming the 90 days trading horizon Hiscox is expected to generate 1.54 times more return on investment than Real Estate. However, Hiscox is 1.54 times more volatile than Real Estate Investors. It trades about 0.18 of its potential returns per unit of risk. Real Estate Investors is currently generating about 0.17 per unit of risk. If you would invest  112,600  in Hiscox on April 24, 2025 and sell it today you would earn a total of  17,900  from holding Hiscox or generate 15.9% return on investment over 90 days.

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

Hiscox  vs.  Real Estate Investors

Hiscox

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hiscox are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Hiscox exhibited solid returns over the last few months and may actually be approaching a breakup point.

Real Estate Investors

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Real Estate Investors are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Real Estate may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Hiscox and Real Estate

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

The idea behind Hiscox and Real Estate Investors 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.