Correlation Between Erie Indemnity and Enstar Group
Can any of the company-specific risk be diversified away by investing in both Erie Indemnity and Enstar Group 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 Erie Indemnity and Enstar Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erie Indemnity and Enstar Group Limited, you can compare the effects of market volatilities on Erie Indemnity and Enstar Group 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 Erie Indemnity with a short position of Enstar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and Enstar Group.
Diversification Opportunities for Erie Indemnity and Enstar Group
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Erie and Enstar is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Erie Indemnity and Enstar Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enstar Group Limited and Erie Indemnity 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 Erie Indemnity are associated (or correlated) with Enstar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enstar Group Limited has no effect on the direction of Erie Indemnity i.e., Erie Indemnity and Enstar Group go up and down completely randomly.
Pair Corralation between Erie Indemnity and Enstar Group
Given the investment horizon of 90 days Erie Indemnity is expected to generate 1.31 times more return on investment than Enstar Group. However, Erie Indemnity is 1.31 times more volatile than Enstar Group Limited. It trades about 0.08 of its potential returns per unit of risk. Enstar Group Limited is currently generating about 0.06 per unit of risk. If you would invest 23,763 in Erie Indemnity on August 27, 2024 and sell it today you would earn a total of 19,087 from holding Erie Indemnity or generate 80.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erie Indemnity vs. Enstar Group Limited
Performance |
| Timeline |
| Erie Indemnity |
| Enstar Group Limited |
Erie Indemnity and Enstar Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erie Indemnity and Enstar Group
The main advantage of trading using opposite Erie Indemnity and Enstar Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erie Indemnity position performs unexpectedly, Enstar Group 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 Enstar Group will offset losses from the drop in Enstar Group's long position.| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. eHealth | Erie Indemnity vs. Aquagold International | Erie Indemnity vs. Morningstar Unconstrained Allocation |
| Enstar Group vs. Global Indemnity PLC | Enstar Group vs. Erie Indemnity | Enstar Group vs. AMERISAFE | Enstar Group vs. Diamond Hill Investment |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |