Correlation Between Erie Indemnity and National Western
Can any of the company-specific risk be diversified away by investing in both Erie Indemnity and National Western 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 National Western into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erie Indemnity and National Western Life, you can compare the effects of market volatilities on Erie Indemnity and National Western 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 National Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and National Western.
Diversification Opportunities for Erie Indemnity and National Western
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Erie and National is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Erie Indemnity and National Western Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Western Life 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 National Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Western Life has no effect on the direction of Erie Indemnity i.e., Erie Indemnity and National Western go up and down completely randomly.
Pair Corralation between Erie Indemnity and National Western
If you would invest 49,998 in National Western Life on August 31, 2024 and sell it today you would earn a total of 0.00 from holding National Western Life or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Erie Indemnity vs. National Western Life
Performance |
| Timeline |
| Erie Indemnity |
| National Western Life |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Erie Indemnity and National Western Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erie Indemnity and National Western
The main advantage of trading using opposite Erie Indemnity and National Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erie Indemnity position performs unexpectedly, National Western 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 National Western will offset losses from the drop in National Western's long position.| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. Huize Holding | Erie Indemnity vs. Crawford Company | Erie Indemnity vs. eHealth |
| National Western vs. MetLife Preferred Stock | National Western vs. Prudential Public Limited | National Western vs. CNO Financial Group | National Western vs. FG Annuities Life |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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