Correlation Between American Financial and Assurant
Can any of the company-specific risk be diversified away by investing in both American Financial and Assurant 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 Assurant 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 Assurant, you can compare the effects of market volatilities on American Financial and Assurant 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 Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Assurant.
Diversification Opportunities for American Financial and Assurant
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Assurant is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of American Financial i.e., American Financial and Assurant go up and down completely randomly.
Pair Corralation between American Financial and Assurant
Given the investment horizon of 90 days American Financial Group is expected to generate 0.89 times more return on investment than Assurant. However, American Financial Group is 1.13 times less risky than Assurant. It trades about 0.03 of its potential returns per unit of risk. Assurant is currently generating about 0.02 per unit of risk. If you would invest 1,887 in American Financial Group on August 27, 2024 and sell it today you would earn a total of 336.00 from holding American Financial Group or generate 17.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Financial Group vs. Assurant
Performance |
| Timeline |
| American Financial |
| Assurant |
American Financial and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Financial and Assurant
The main advantage of trading using opposite American Financial and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Financial position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.| American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. Aegon Funding | American Financial vs. American Financial Group |
| Assurant vs. American Financial Group | Assurant vs. Aegon Funding | Assurant vs. American Financial Group | Assurant vs. American Financial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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