Correlation Between Employers Holdings and Lucid
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Lucid 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 Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Lucid Group, you can compare the effects of market volatilities on Employers Holdings and Lucid 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 Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Lucid.
Diversification Opportunities for Employers Holdings and Lucid
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Employers and Lucid is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group 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 Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Employers Holdings i.e., Employers Holdings and Lucid go up and down completely randomly.
Pair Corralation between Employers Holdings and Lucid
Considering the 90-day investment horizon Employers Holdings is expected to generate 0.26 times more return on investment than Lucid. However, Employers Holdings is 3.88 times less risky than Lucid. It trades about 0.11 of its potential returns per unit of risk. Lucid Group is currently generating about -0.04 per unit of risk. If you would invest 3,826 in Employers Holdings on September 4, 2024 and sell it today you would earn a total of 1,482 from holding Employers Holdings or generate 38.73% 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. Lucid Group
Performance |
| Timeline |
| Employers Holdings |
| Lucid Group |
Employers Holdings and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Lucid
The main advantage of trading using opposite Employers Holdings and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Lucid 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 Lucid will offset losses from the drop in Lucid's long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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