Correlation Between Assurant and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Assurant and Universal Insurance 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 Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assurant and Universal Insurance Holdings, you can compare the effects of market volatilities on Assurant and Universal Insurance 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and Universal Insurance.
Diversification Opportunities for Assurant and Universal Insurance
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Assurant and Universal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Assurant i.e., Assurant and Universal Insurance go up and down completely randomly.
Pair Corralation between Assurant and Universal Insurance
Considering the 90-day investment horizon Assurant is expected to generate 0.9 times more return on investment than Universal Insurance. However, Assurant is 1.11 times less risky than Universal Insurance. It trades about 0.47 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.33 per unit of risk. If you would invest 19,423 in Assurant on August 29, 2024 and sell it today you would earn a total of 3,445 from holding Assurant or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assurant vs. Universal Insurance Holdings
Performance |
| Timeline |
| Assurant |
| Universal Insurance |
Assurant and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assurant and Universal Insurance
The main advantage of trading using opposite Assurant and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assurant position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact Holdings |
| Universal Insurance vs. HCI Group | Universal Insurance vs. Kingstone Companies | Universal Insurance vs. Horace Mann Educators | Universal Insurance vs. Heritage Insurance Hldgs |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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