Correlation Between Superior Plus and American Financial
Can any of the company-specific risk be diversified away by investing in both Superior Plus and American Financial 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 Superior Plus and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and American Financial Group, you can compare the effects of market volatilities on Superior Plus and American Financial 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 Superior Plus with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and American Financial.
Diversification Opportunities for Superior Plus and American Financial
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and American is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Superior Plus 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 Superior Plus Corp are associated (or correlated) with American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of Superior Plus i.e., Superior Plus and American Financial go up and down completely randomly.
Pair Corralation between Superior Plus and American Financial
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the American Financial. In addition to that, Superior Plus is 1.56 times more volatile than American Financial Group. It trades about -0.05 of its total potential returns per unit of risk. American Financial Group is currently generating about 0.1 per unit of volatility. If you would invest 9,577 in American Financial Group on September 4, 2024 and sell it today you would earn a total of 4,423 from holding American Financial Group or generate 46.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Superior Plus Corp vs. American Financial Group
Performance |
| Timeline |
| Superior Plus Corp |
| American Financial |
Superior Plus and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and American Financial
The main advantage of trading using opposite Superior Plus and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, American Financial 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 American Financial will offset losses from the drop in American Financial's long position.| Superior Plus vs. Food Life Companies | Superior Plus vs. Mitsubishi Materials | Superior Plus vs. United Natural Foods | Superior Plus vs. NEWELL RUBBERMAID |
| American Financial vs. AIR PRODCHEMICALS | American Financial vs. SHIN ETSU CHEMICAL | American Financial vs. Westlake Chemical | American Financial vs. Sanyo Chemical Industries |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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