Correlation Between Alerian MLP and Assurant
Can any of the company-specific risk be diversified away by investing in both Alerian MLP and Assurant 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 Alerian MLP and Assurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alerian MLP Index and Assurant, you can compare the effects of market volatilities on Alerian MLP and Assurant 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 Alerian MLP with a short position of Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alerian MLP and Assurant.
Diversification Opportunities for Alerian MLP and Assurant
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alerian and Assurant is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alerian MLP Index and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and Alerian MLP 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 Alerian MLP Index are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Alerian MLP i.e., Alerian MLP and Assurant go up and down completely randomly.
Pair Corralation between Alerian MLP and Assurant
Assuming the 90 days trading horizon Alerian MLP is expected to generate 2.25 times less return on investment than Assurant. But when comparing it to its historical volatility, Alerian MLP Index is 1.64 times less risky than Assurant. It trades about 0.06 of its potential returns per unit of risk. Assurant is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 12,436 in Assurant on August 23, 2024 and sell it today you would earn a total of 10,086 from holding Assurant or generate 81.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alerian MLP Index vs. Assurant
Performance |
| Timeline |
Alerian MLP and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Alerian MLP Index
Pair trading matchups for Alerian MLP
Assurant
Pair trading matchups for Assurant
Pair Trading with Alerian MLP and Assurant
The main advantage of trading using opposite Alerian MLP and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alerian MLP position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.| Alerian MLP vs. Assurant | Alerian MLP vs. Siriuspoint | Alerian MLP vs. Newell Brands | Alerian MLP vs. GoHealth |
| Assurant vs. MBIA Inc | Assurant vs. NMI Holdings | Assurant vs. Employers Holdings | Assurant vs. James River Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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