Correlation Between Employers Holdings and Enact Holdings
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Enact Holdings 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 Employers Holdings and Enact Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Enact Holdings, you can compare the effects of market volatilities on Employers Holdings and Enact Holdings 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 Employers Holdings with a short position of Enact Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Enact Holdings.
Diversification Opportunities for Employers Holdings and Enact Holdings
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Employers and Enact is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Enact Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enact Holdings and Employers Holdings 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 Employers Holdings are associated (or correlated) with Enact Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enact Holdings has no effect on the direction of Employers Holdings i.e., Employers Holdings and Enact Holdings go up and down completely randomly.
Pair Corralation between Employers Holdings and Enact Holdings
Considering the 90-day investment horizon Employers Holdings is expected to generate 1.22 times more return on investment than Enact Holdings. However, Employers Holdings is 1.22 times more volatile than Enact Holdings. It trades about 0.15 of its potential returns per unit of risk. Enact Holdings is currently generating about 0.09 per unit of risk. If you would invest 4,039 in Employers Holdings on August 24, 2024 and sell it today you would earn a total of 1,240 from holding Employers Holdings or generate 30.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. Enact Holdings
Performance |
| Timeline |
| Employers Holdings |
| Enact Holdings |
Employers Holdings and Enact Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Enact Holdings
The main advantage of trading using opposite Employers Holdings and Enact Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Enact Holdings 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 Enact Holdings will offset losses from the drop in Enact Holdings' long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| Enact Holdings vs. Assured Guaranty | Enact Holdings vs. AMERISAFE | Enact Holdings vs. MBIA Inc | Enact Holdings vs. ICC Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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