Correlation Between American Financial and Allstate
Can any of the company-specific risk be diversified away by investing in both American Financial and Allstate 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 Financial and Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Financial Group and The Allstate, you can compare the effects of market volatilities on American Financial and Allstate 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 Financial with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Allstate.
Diversification Opportunities for American Financial and Allstate
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Allstate is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and American Financial 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 Financial Group are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of American Financial i.e., American Financial and Allstate go up and down completely randomly.
Pair Corralation between American Financial and Allstate
Considering the 90-day investment horizon American Financial Group is expected to generate 3.17 times more return on investment than Allstate. However, American Financial is 3.17 times more volatile than The Allstate. It trades about 0.11 of its potential returns per unit of risk. The Allstate is currently generating about 0.06 per unit of risk. If you would invest 12,291 in American Financial Group on September 2, 2024 and sell it today you would earn a total of 2,395 from holding American Financial Group or generate 19.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Financial Group vs. The Allstate
Performance |
| Timeline |
| American Financial |
| Allstate |
American Financial and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Financial and Allstate
The main advantage of trading using opposite American Financial and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Financial position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.| American Financial vs. Selective Insurance Group | American Financial vs. Horace Mann Educators | American Financial vs. Kemper | American Financial vs. ProAssurance |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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