Correlation Between American Financial and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both American Financial and Reinsurance Group 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 Reinsurance Group 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 Reinsurance Group of, you can compare the effects of market volatilities on American Financial and Reinsurance Group 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 Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Reinsurance Group.
Diversification Opportunities for American Financial and Reinsurance Group
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Reinsurance is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of American Financial i.e., American Financial and Reinsurance Group go up and down completely randomly.
Pair Corralation between American Financial and Reinsurance Group
Given the investment horizon of 90 days American Financial Group is expected to under-perform the Reinsurance Group. In addition to that, American Financial is 5.42 times more volatile than Reinsurance Group of. It trades about -0.09 of its total potential returns per unit of risk. Reinsurance Group of is currently generating about -0.08 per unit of volatility. If you would invest 2,500 in Reinsurance Group of on August 29, 2024 and sell it today you would lose (9.00) from holding Reinsurance Group of or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Financial Group vs. Reinsurance Group of
Performance |
| Timeline |
| American Financial |
| Reinsurance Group |
American Financial and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Financial and Reinsurance Group
The main advantage of trading using opposite American Financial and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Financial position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group'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 |
| Reinsurance Group vs. Southern Co | Reinsurance Group vs. Stifel Financial | Reinsurance Group vs. Entergy New Orleans | Reinsurance Group vs. Entergy Arkansas LLC |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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