Correlation Between Employers Holdings and Old Republic
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Old Republic 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 Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Old Republic International, you can compare the effects of market volatilities on Employers Holdings and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Old Republic.
Diversification Opportunities for Employers Holdings and Old Republic
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Employers and Old is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Employers Holdings i.e., Employers Holdings and Old Republic go up and down completely randomly.
Pair Corralation between Employers Holdings and Old Republic
Considering the 90-day investment horizon Employers Holdings is expected to generate 1.32 times more return on investment than Old Republic. However, Employers Holdings is 1.32 times more volatile than Old Republic International. It trades about 0.14 of its potential returns per unit of risk. Old Republic International is currently generating about 0.16 per unit of risk. If you would invest 4,166 in Employers Holdings on August 29, 2024 and sell it today you would earn a total of 1,158 from holding Employers Holdings or generate 27.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. Old Republic International
Performance |
| Timeline |
| Employers Holdings |
| Old Republic Interna |
Employers Holdings and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Old Republic
The main advantage of trading using opposite Employers Holdings and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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