Correlation Between Kemper and White Mountains

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

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

Diversification Opportunities for Kemper and White Mountains

0.81

Correlation Coefficient

Kemper  White Mountains

Very poor diversification

The 3 months correlation between Kemper and White is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kemper and White Mountains Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Mountains Insurance and Kemper 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 Kemper are associated (or correlated) with White Mountains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Mountains Insurance has no effect on the direction of Kemper i.e., Kemper and White Mountains go up and down completely randomly.

Pair Corralation between Kemper and White Mountains

Given the investment horizon of 90 days Kemper is expected to generate 1.32 times more return on investment than White Mountains. However, Kemper is 1.32 times more volatile than White Mountains Insurance. It trades about 0.04 of its potential returns per unit of risk. White Mountains Insurance is currently generating about 0.04 per unit of risk. If you would invest  4,615  in Kemper on March 23, 2025 and sell it today you would earn a total of  1,714  from holding Kemper or generate 37.14% return on investment over 90 days.

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

Kemper  vs.  White Mountains Insurance

Kemper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kemper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kemper is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

White Mountains Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days White Mountains Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Kemper and White Mountains

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

The idea behind Kemper and White Mountains Insurance 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.