Correlation Between VPC Specialty and Ecclesiastical Insurance

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

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

Diversification Opportunities for VPC Specialty and Ecclesiastical Insurance

0.67

Correlation Coefficient

VPC Specialty  Ecclesiastical Insurance

Poor diversification

The 3 months correlation between VPC and Ecclesiastical is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding VPC Specialty Lending and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance and VPC Specialty 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 VPC Specialty Lending are associated (or correlated) with Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of VPC Specialty i.e., VPC Specialty and Ecclesiastical Insurance go up and down completely randomly.

Pair Corralation between VPC Specialty and Ecclesiastical Insurance

Assuming the 90 days trading horizon VPC Specialty Lending is expected to generate 3.04 times more return on investment than Ecclesiastical Insurance. However, VPC Specialty is 3.04 times more volatile than Ecclesiastical Insurance Office. It trades about 0.11 of its potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about 0.04 per unit of risk. If you would invest  1,275  in VPC Specialty Lending on April 20, 2025 and sell it today you would earn a total of  205.00  from holding VPC Specialty Lending or generate 16.08% return on investment over 90 days.

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

VPC Specialty Lending  vs.  Ecclesiastical Insurance Offic

VPC Specialty Lending

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VPC Specialty Lending are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, VPC Specialty exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ecclesiastical Insurance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ecclesiastical Insurance Office are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ecclesiastical Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VPC Specialty and Ecclesiastical Insurance

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

The idea behind VPC Specialty Lending and Ecclesiastical Insurance Office 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.