Correlation Between Crawford and Erie Indemnity
Can any of the company-specific risk be diversified away by investing in both Crawford 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 Crawford and Erie Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crawford Company and Erie Indemnity, you can compare the effects of market volatilities on Crawford 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 Crawford with a short position of Erie Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crawford and Erie Indemnity.
Diversification Opportunities for Crawford and Erie Indemnity
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crawford and Erie is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Crawford Company and Erie Indemnity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erie Indemnity and Crawford 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 Crawford Company 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 Crawford i.e., Crawford and Erie Indemnity go up and down completely randomly.
Pair Corralation between Crawford and Erie Indemnity
Assuming the 90 days horizon Crawford Company is expected to under-perform the Erie Indemnity. In addition to that, Crawford is 1.07 times more volatile than Erie Indemnity. It trades about -0.09 of its total potential returns per unit of risk. Erie Indemnity is currently generating about -0.08 per unit of volatility. If you would invest 45,036 in Erie Indemnity on August 28, 2024 and sell it today you would lose (1,906) from holding Erie Indemnity or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crawford Company vs. Erie Indemnity
Performance |
| Timeline |
| Crawford |
| Erie Indemnity |
Crawford and Erie Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crawford and Erie Indemnity
The main advantage of trading using opposite Crawford and Erie Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crawford 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.| Crawford vs. CorVel Corp | Crawford vs. Erie Indemnity | Crawford vs. Willis Towers Watson | Crawford vs. Huize Holding |
| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. eHealth | Erie Indemnity vs. Aquagold International | Erie Indemnity vs. Morningstar Unconstrained Allocation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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