Correlation Between Employers Holdings and Solventum Corp
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Solventum Corp 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 Solventum Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Solventum Corp, you can compare the effects of market volatilities on Employers Holdings and Solventum Corp 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 Solventum Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Solventum Corp.
Diversification Opportunities for Employers Holdings and Solventum Corp
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Employers and Solventum is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Solventum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solventum Corp 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 Solventum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solventum Corp has no effect on the direction of Employers Holdings i.e., Employers Holdings and Solventum Corp go up and down completely randomly.
Pair Corralation between Employers Holdings and Solventum Corp
Considering the 90-day investment horizon Employers Holdings is expected to generate 1.46 times more return on investment than Solventum Corp. However, Employers Holdings is 1.46 times more volatile than Solventum Corp. It trades about 0.26 of its potential returns per unit of risk. Solventum Corp is currently generating about -0.03 per unit of risk. If you would invest 4,754 in Employers Holdings on September 2, 2024 and sell it today you would earn a total of 582.00 from holding Employers Holdings or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. Solventum Corp
Performance |
| Timeline |
| Employers Holdings |
| Solventum Corp |
Employers Holdings and Solventum Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Solventum Corp
The main advantage of trading using opposite Employers Holdings and Solventum Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Solventum Corp 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 Solventum Corp will offset losses from the drop in Solventum Corp's long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| Solventum Corp vs. Academy Sports Outdoors | Solventum Corp vs. Haverty Furniture Companies | Solventum Corp vs. Franklin Street Properties | Solventum Corp vs. MI Homes |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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