Correlation Between American National and Citizens
Can any of the company-specific risk be diversified away by investing in both American National and Citizens 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 American National and Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American National Group and Citizens, you can compare the effects of market volatilities on American National and Citizens 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 American National with a short position of Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of American National and Citizens.
Diversification Opportunities for American National and Citizens
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Citizens is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American National Group and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens and American National 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 American National Group are associated (or correlated) with Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of American National i.e., American National and Citizens go up and down completely randomly.
Pair Corralation between American National and Citizens
Assuming the 90 days trading horizon American National is expected to generate 4.69 times less return on investment than Citizens. But when comparing it to its historical volatility, American National Group is 4.3 times less risky than Citizens. It trades about 0.07 of its potential returns per unit of risk. Citizens is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Citizens on August 31, 2024 and sell it today you would earn a total of 234.00 from holding Citizens or generate 109.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
American National Group vs. Citizens
Performance |
| Timeline |
| American National |
| Citizens |
American National and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American National and Citizens
The main advantage of trading using opposite American National and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American National position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' long position.| American National vs. Afya | American National vs. Nexstar Broadcasting Group | American National vs. Ihuman Inc | American National vs. Hafnia Limited |
| Citizens vs. Lincoln National | Citizens vs. Aflac Incorporated | Citizens vs. Unum Group | Citizens vs. Manulife Financial Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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