Correlation Between Erie Indemnity and Old Republic
Can any of the company-specific risk be diversified away by investing in both Erie Indemnity 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 Erie Indemnity and Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erie Indemnity and Old Republic International, you can compare the effects of market volatilities on Erie Indemnity 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 Erie Indemnity with a short position of Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and Old Republic.
Diversification Opportunities for Erie Indemnity and Old Republic
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Erie and Old is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Erie Indemnity 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 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 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 Erie Indemnity i.e., Erie Indemnity and Old Republic go up and down completely randomly.
Pair Corralation between Erie Indemnity and Old Republic
Given the investment horizon of 90 days Erie Indemnity is expected to under-perform the Old Republic. In addition to that, Erie Indemnity is 1.52 times more volatile than Old Republic International. It trades about -0.11 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.01 per unit of volatility. If you would invest 3,656 in Old Republic International on November 27, 2024 and sell it today you would earn a total of 23.00 from holding Old Republic International or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erie Indemnity vs. Old Republic International
Performance |
| Timeline |
| Erie Indemnity |
| Old Republic Interna |
Erie Indemnity and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erie Indemnity and Old Republic
The main advantage of trading using opposite Erie Indemnity and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erie Indemnity 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.| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. Huize Holding | Erie Indemnity vs. Crawford Company | Erie Indemnity vs. eHealth |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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