Correlation Between American Financial and Credit Enhanced
Can any of the company-specific risk be diversified away by investing in both American Financial and Credit Enhanced 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 Credit Enhanced 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 Credit Enhanced Corts, you can compare the effects of market volatilities on American Financial and Credit Enhanced 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 Credit Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Credit Enhanced.
Diversification Opportunities for American Financial and Credit Enhanced
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Credit is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and Credit Enhanced Corts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Enhanced Corts 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 Credit Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Enhanced Corts has no effect on the direction of American Financial i.e., American Financial and Credit Enhanced go up and down completely randomly.
Pair Corralation between American Financial and Credit Enhanced
Given the investment horizon of 90 days American Financial Group is expected to generate 0.78 times more return on investment than Credit Enhanced. However, American Financial Group is 1.28 times less risky than Credit Enhanced. It trades about -0.07 of its potential returns per unit of risk. Credit Enhanced Corts is currently generating about -0.08 per unit of risk. If you would invest 2,485 in American Financial Group on August 26, 2024 and sell it today you would lose (23.00) from holding American Financial Group or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Financial Group vs. Credit Enhanced Corts
Performance |
| Timeline |
| American Financial |
| Credit Enhanced Corts |
American Financial and Credit Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Financial and Credit Enhanced
The main advantage of trading using opposite American Financial and Credit Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Financial position performs unexpectedly, Credit Enhanced 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 Credit Enhanced will offset losses from the drop in Credit Enhanced's long position.| American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. Aegon Funding | American Financial vs. CMS Energy Corp |
| Credit Enhanced vs. DBA Sempra 5750 | Credit Enhanced vs. CMS Energy Corp | Credit Enhanced vs. American Financial Group | Credit Enhanced vs. Maiden Holdings North |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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