Correlation Between Assurant and Mars Acquisition

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Can any of the company-specific risk be diversified away by investing in both Assurant and Mars Acquisition 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 Mars Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assurant and Mars Acquisition Corp, you can compare the effects of market volatilities on Assurant and Mars Acquisition 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 Mars Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and Mars Acquisition.

Diversification Opportunities for Assurant and Mars Acquisition

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Assurant and Mars is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Assurant i.e., Assurant and Mars Acquisition go up and down completely randomly.

Pair Corralation between Assurant and Mars Acquisition

Considering the 90-day investment horizon Assurant is expected to generate 6.22 times less return on investment than Mars Acquisition. But when comparing it to its historical volatility, Assurant is 7.29 times less risky than Mars Acquisition. It trades about 0.09 of its potential returns per unit of risk. Mars Acquisition Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Mars Acquisition Corp on September 12, 2024 and sell it today you would earn a total of  14.00  from holding Mars Acquisition Corp or generate 63.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy40.0%
ValuesDaily Returns

Assurant  vs.  Mars Acquisition Corp

 Performance 
       Timeline  
Assurant 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant showed solid returns over the last few months and may actually be approaching a breakup point.
Mars Acquisition Corp 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Mars Acquisition Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Mars Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Assurant and Mars Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Assurant and Mars Acquisition

The main advantage of trading using opposite Assurant and Mars Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assurant position performs unexpectedly, Mars Acquisition 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 Mars Acquisition will offset losses from the drop in Mars Acquisition's long position.
The idea behind Assurant and Mars Acquisition Corp 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.
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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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