Correlation Between Assurant and Allstate
Can any of the company-specific risk be diversified away by investing in both Assurant 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 Assurant and Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assurant and The Allstate, you can compare the effects of market volatilities on Assurant 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 Assurant with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and Allstate.
Diversification Opportunities for Assurant and Allstate
Very poor diversification
The 3 months correlation between Assurant and Allstate is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Assurant 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 Assurant 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 Assurant i.e., Assurant and Allstate go up and down completely randomly.
Pair Corralation between Assurant and Allstate
Considering the 90-day investment horizon Assurant is expected to generate 1.0 times more return on investment than Allstate. However, Assurant is 1.0 times more volatile than The Allstate. It trades about 0.09 of its potential returns per unit of risk. The Allstate is currently generating about 0.08 per unit of risk. If you would invest 12,586 in Assurant on August 29, 2024 and sell it today you would earn a total of 10,119 from holding Assurant or generate 80.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assurant vs. The Allstate
Performance |
| Timeline |
| Assurant |
| Allstate |
Assurant and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assurant and Allstate
The main advantage of trading using opposite Assurant and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assurant 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.The idea behind Assurant and The Allstate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Allstate vs. Argo Group International | Allstate vs. Donegal Group A | Allstate vs. Selective Insurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |