Correlation Between American Financial and Tokio Marine
Can any of the company-specific risk be diversified away by investing in both American Financial and Tokio Marine 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 Tokio Marine 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 Tokio Marine Holdings, you can compare the effects of market volatilities on American Financial and Tokio Marine 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 Tokio Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Tokio Marine.
Diversification Opportunities for American Financial and Tokio Marine
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Tokio is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings 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 Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of American Financial i.e., American Financial and Tokio Marine go up and down completely randomly.
Pair Corralation between American Financial and Tokio Marine
If you would invest 12,631 in American Financial Group on August 28, 2024 and sell it today you would earn a total of 2,277 from holding American Financial Group or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
American Financial Group vs. Tokio Marine Holdings
Performance |
| Timeline |
| American Financial |
| Tokio Marine Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Financial and Tokio Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Financial and Tokio Marine
The main advantage of trading using opposite American Financial and Tokio Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Financial position performs unexpectedly, Tokio Marine 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 Tokio Marine will offset losses from the drop in Tokio Marine's long position.| American Financial vs. Selective Insurance Group | American Financial vs. Horace Mann Educators | American Financial vs. Kemper | American Financial vs. ProAssurance |
| Tokio Marine vs. American Financial Group | Tokio Marine vs. Aspen Insurance Holdings | Tokio Marine vs. The Allstate | Tokio Marine vs. Aspen Insurance Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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