Correlation Between Enact Holdings and James River
Can any of the company-specific risk be diversified away by investing in both Enact Holdings and James River 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 Enact Holdings and James River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enact Holdings and James River Group, you can compare the effects of market volatilities on Enact Holdings and James River 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 Enact Holdings with a short position of James River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enact Holdings and James River.
Diversification Opportunities for Enact Holdings and James River
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enact and James is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Enact Holdings and James River Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James River Group and Enact Holdings 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 Enact Holdings are associated (or correlated) with James River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James River Group has no effect on the direction of Enact Holdings i.e., Enact Holdings and James River go up and down completely randomly.
Pair Corralation between Enact Holdings and James River
Considering the 90-day investment horizon Enact Holdings is expected to generate 24.26 times less return on investment than James River. But when comparing it to its historical volatility, Enact Holdings is 2.1 times less risky than James River. It trades about 0.01 of its potential returns per unit of risk. James River Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 466.00 in James River Group on October 24, 2024 and sell it today you would earn a total of 13.00 from holding James River Group or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enact Holdings vs. James River Group
Performance |
| Timeline |
| Enact Holdings |
| James River Group |
Enact Holdings and James River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enact Holdings and James River
The main advantage of trading using opposite Enact Holdings and James River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enact Holdings position performs unexpectedly, James River 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 James River will offset losses from the drop in James River's long position.| Enact Holdings vs. Assured Guaranty | Enact Holdings vs. AMERISAFE | Enact Holdings vs. MBIA Inc | Enact Holdings vs. ICC Holdings |
| James River vs. Employers Holdings | James River vs. Investors Title | James River vs. AMERISAFE | James River vs. Essent Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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