Correlation Between Workspace Group and Hiscox

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

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

Diversification Opportunities for Workspace Group and Hiscox

-0.79

Correlation Coefficient

Workspace Group  Hiscox

Pay attention - limited upside

The 3 months correlation between Workspace and Hiscox is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Workspace Group PLC and Hiscox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiscox and Workspace Group 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 Workspace Group PLC are associated (or correlated) with Hiscox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiscox has no effect on the direction of Workspace Group i.e., Workspace Group and Hiscox go up and down completely randomly.

Pair Corralation between Workspace Group and Hiscox

Assuming the 90 days trading horizon Workspace Group PLC is expected to under-perform the Hiscox. In addition to that, Workspace Group is 1.15 times more volatile than Hiscox. It trades about -0.01 of its total potential returns per unit of risk. Hiscox is currently generating about 0.19 per unit of volatility. If you would invest  110,400  in Hiscox on April 25, 2025 and sell it today you would earn a total of  19,200  from holding Hiscox or generate 17.39% return on investment over 90 days.

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

Workspace Group PLC  vs.  Hiscox

Workspace Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Workspace Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Workspace Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hiscox

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hiscox are ranked lower than 15 (%) 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.

Pair Trading with Workspace Group and Hiscox

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

The idea behind Workspace Group PLC and Hiscox 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 Transaction History module to view history of all your transactions and understand their impact on performance.