Correlation Between Allstate and Stewart Information
Can any of the company-specific risk be diversified away by investing in both Allstate and Stewart Information 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 Allstate and Stewart Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Allstate and Stewart Information Services, you can compare the effects of market volatilities on Allstate and Stewart Information 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 Allstate with a short position of Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstate and Stewart Information.
Diversification Opportunities for Allstate and Stewart Information
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allstate and Stewart is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information and Allstate 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 The Allstate are associated (or correlated) with Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Allstate i.e., Allstate and Stewart Information go up and down completely randomly.
Pair Corralation between Allstate and Stewart Information
Assuming the 90 days horizon The Allstate is expected to generate 1.27 times more return on investment than Stewart Information. However, Allstate is 1.27 times more volatile than Stewart Information Services. It trades about -0.02 of its potential returns per unit of risk. Stewart Information Services is currently generating about -0.18 per unit of risk. If you would invest 18,495 in The Allstate on October 23, 2024 and sell it today you would lose (285.00) from holding The Allstate or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Allstate vs. Stewart Information Services
Performance |
| Timeline |
| Allstate |
| Stewart Information |
Allstate and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allstate and Stewart Information
The main advantage of trading using opposite Allstate and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allstate position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information's long position.| Allstate vs. The Progressive | Allstate vs. PICC Property and | Allstate vs. Cincinnati Financial | Allstate vs. Markel |
| Stewart Information vs. The Progressive | Stewart Information vs. The Allstate | Stewart Information vs. PICC Property and | Stewart Information vs. Cincinnati Financial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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