Correlation Between Employers Holdings and Ryan Specialty
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Ryan Specialty 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 Ryan Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Ryan Specialty Group, you can compare the effects of market volatilities on Employers Holdings and Ryan Specialty 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 Ryan Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Ryan Specialty.
Diversification Opportunities for Employers Holdings and Ryan Specialty
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Employers and Ryan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Ryan Specialty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryan Specialty 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 Ryan Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryan Specialty Group has no effect on the direction of Employers Holdings i.e., Employers Holdings and Ryan Specialty go up and down completely randomly.
Pair Corralation between Employers Holdings and Ryan Specialty
Considering the 90-day investment horizon Employers Holdings is expected to generate 2.18 times less return on investment than Ryan Specialty. But when comparing it to its historical volatility, Employers Holdings is 1.13 times less risky than Ryan Specialty. It trades about 0.04 of its potential returns per unit of risk. Ryan Specialty Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,124 in Ryan Specialty Group on August 24, 2024 and sell it today you would earn a total of 3,229 from holding Ryan Specialty Group or generate 78.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. Ryan Specialty Group
Performance |
| Timeline |
| Employers Holdings |
| Ryan Specialty Group |
Employers Holdings and Ryan Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Ryan Specialty
The main advantage of trading using opposite Employers Holdings and Ryan Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Ryan Specialty 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 Ryan Specialty will offset losses from the drop in Ryan Specialty's long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| Ryan Specialty vs. ICC Holdings | Ryan Specialty vs. AMERISAFE | Ryan Specialty vs. NMI Holdings | Ryan Specialty 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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