Correlation Between American Equity and Atlantic American
Can any of the company-specific risk be diversified away by investing in both American Equity and Atlantic American 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 American Equity and Atlantic American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Equity Investment and Atlantic American, you can compare the effects of market volatilities on American Equity and Atlantic American 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 American Equity with a short position of Atlantic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Equity and Atlantic American.
Diversification Opportunities for American Equity and Atlantic American
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Atlantic is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding American Equity Investment and Atlantic American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic American and American Equity 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 American Equity Investment are associated (or correlated) with Atlantic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic American has no effect on the direction of American Equity i.e., American Equity and Atlantic American go up and down completely randomly.
Pair Corralation between American Equity and Atlantic American
Considering the 90-day investment horizon American Equity Investment is expected to generate 1.05 times more return on investment than Atlantic American. However, American Equity is 1.05 times more volatile than Atlantic American. It trades about 0.22 of its potential returns per unit of risk. Atlantic American is currently generating about -0.01 per unit of risk. If you would invest 4,239 in American Equity Investment on August 31, 2024 and sell it today you would earn a total of 1,136 from holding American Equity Investment or generate 26.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 8.56% |
| Values | Daily Returns |
American Equity Investment vs. Atlantic American
Performance |
| Timeline |
| American Equity Inve |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Atlantic American |
American Equity and Atlantic American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Equity and Atlantic American
The main advantage of trading using opposite American Equity and Atlantic American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Equity position performs unexpectedly, Atlantic American 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 Atlantic American will offset losses from the drop in Atlantic American's long position.| American Equity vs. MetLife Preferred Stock | American Equity vs. Prudential Public Limited | American Equity vs. MetLife Preferred Stock | American Equity vs. Jackson Financial |
| Atlantic American vs. Lincoln National | Atlantic American vs. Aflac Incorporated | Atlantic American vs. Unum Group | Atlantic American vs. Manulife Financial Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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