Correlation Between Assurant and Southern

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

Diversification Opportunities for Assurant and Southern

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Assurant and Southern is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Assurant i.e., Assurant and Southern go up and down completely randomly.

Pair Corralation between Assurant and Southern

Given the investment horizon of 90 days Assurant is expected to generate 1.26 times more return on investment than Southern. However, Assurant is 1.26 times more volatile than Southern Co. It trades about 0.04 of its potential returns per unit of risk. Southern Co is currently generating about -0.02 per unit of risk. If you would invest  2,060  in Assurant on September 1, 2024 and sell it today you would earn a total of  135.00  from holding Assurant or generate 6.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Assurant  vs.  Southern Co

 Performance 
       Timeline  
Assurant 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Assurant is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Southern 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Southern Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, Southern is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Assurant and Southern Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Assurant and Southern

The main advantage of trading using opposite Assurant and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assurant position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.
The idea behind Assurant and Southern Co 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.
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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