Correlation Between AMERISAFE and Erie Indemnity
Can any of the company-specific risk be diversified away by investing in both AMERISAFE and Erie Indemnity 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 AMERISAFE and Erie Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMERISAFE and Erie Indemnity, you can compare the effects of market volatilities on AMERISAFE and Erie Indemnity 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 AMERISAFE with a short position of Erie Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERISAFE and Erie Indemnity.
Diversification Opportunities for AMERISAFE and Erie Indemnity
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AMERISAFE and Erie is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding AMERISAFE and Erie Indemnity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erie Indemnity and AMERISAFE 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 AMERISAFE are associated (or correlated) with Erie Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erie Indemnity has no effect on the direction of AMERISAFE i.e., AMERISAFE and Erie Indemnity go up and down completely randomly.
Pair Corralation between AMERISAFE and Erie Indemnity
Given the investment horizon of 90 days AMERISAFE is expected to generate 0.83 times more return on investment than Erie Indemnity. However, AMERISAFE is 1.21 times less risky than Erie Indemnity. It trades about 0.18 of its potential returns per unit of risk. Erie Indemnity is currently generating about -0.04 per unit of risk. If you would invest 5,473 in AMERISAFE on August 31, 2024 and sell it today you would earn a total of 402.00 from holding AMERISAFE or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMERISAFE vs. Erie Indemnity
Performance |
| Timeline |
| AMERISAFE |
| Erie Indemnity |
AMERISAFE and Erie Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMERISAFE and Erie Indemnity
The main advantage of trading using opposite AMERISAFE and Erie Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERISAFE position performs unexpectedly, Erie Indemnity 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 Erie Indemnity will offset losses from the drop in Erie Indemnity's long position.| AMERISAFE vs. Assured Guaranty | AMERISAFE vs. MBIA Inc | AMERISAFE vs. Enact Holdings | AMERISAFE vs. ICC Holdings |
| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. Huize Holding | Erie Indemnity vs. Crawford Company | Erie Indemnity vs. eHealth |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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