Correlation Between Employers Holdings and Better Home
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Better Home 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 Better Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Better Home Finance, you can compare the effects of market volatilities on Employers Holdings and Better Home 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 Better Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Better Home.
Diversification Opportunities for Employers Holdings and Better Home
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Employers and Better is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Better Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Home Finance 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 Better Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Home Finance has no effect on the direction of Employers Holdings i.e., Employers Holdings and Better Home go up and down completely randomly.
Pair Corralation between Employers Holdings and Better Home
Considering the 90-day investment horizon Employers Holdings is expected to generate 0.3 times more return on investment than Better Home. However, Employers Holdings is 3.33 times less risky than Better Home. It trades about 0.16 of its potential returns per unit of risk. Better Home Finance is currently generating about 0.01 per unit of risk. If you would invest 4,063 in Employers Holdings on September 3, 2024 and sell it today you would earn a total of 1,273 from holding Employers Holdings or generate 31.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. Better Home Finance
Performance |
| Timeline |
| Employers Holdings |
| Better Home Finance |
Employers Holdings and Better Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Better Home
The main advantage of trading using opposite Employers Holdings and Better Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Better Home 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 Better Home will offset losses from the drop in Better Home's long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| Better Home vs. Citizens | Better Home vs. Employers Holdings | Better Home vs. Maanshan Iron Steel | Better Home vs. GoHealth |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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