Correlation Between James River and Investors Title

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

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

Diversification Opportunities for James River and Investors Title

0.14

Correlation Coefficient

James River  Investors Title

Average diversification

The 3 months correlation between James and Investors is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding James River Group and Investors Title in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investors Title and James River 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 James River Group are associated (or correlated) with Investors Title. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investors Title has no effect on the direction of James River i.e., James River and Investors Title go up and down completely randomly.

Pair Corralation between James River and Investors Title

Given the investment horizon of 90 days James River Group is expected to generate 1.92 times more return on investment than Investors Title. However, James River is 1.92 times more volatile than Investors Title. It trades about 0.26 of its potential returns per unit of risk. Investors Title is currently generating about -0.06 per unit of risk. If you would invest  479.00  in James River Group on March 3, 2025 and sell it today you would earn a total of  103.00  from holding James River Group or generate 21.5% return on investment over 90 days.

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

James River Group  vs.  Investors Title

James River Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in James River Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, James River reported solid returns over the last few months and may actually be approaching a breakup point.

Investors Title

Risk-Adjusted Performance

Very Weak

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

Pair Trading with James River and Investors Title

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

The idea behind James River Group and Investors Title 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.