Correlation Between Erie Indemnity and Reliance Global
Can any of the company-specific risk be diversified away by investing in both Erie Indemnity and Reliance Global 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 Reliance Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erie Indemnity and Reliance Global Group, you can compare the effects of market volatilities on Erie Indemnity and Reliance Global 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 Reliance Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and Reliance Global.
Diversification Opportunities for Erie Indemnity and Reliance Global
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erie and Reliance is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Erie Indemnity and Reliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Global Group 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 Reliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Global Group has no effect on the direction of Erie Indemnity i.e., Erie Indemnity and Reliance Global go up and down completely randomly.
Pair Corralation between Erie Indemnity and Reliance Global
Given the investment horizon of 90 days Erie Indemnity is expected to generate 0.16 times more return on investment than Reliance Global. However, Erie Indemnity is 6.29 times less risky than Reliance Global. It trades about 0.07 of its potential returns per unit of risk. Reliance Global Group is currently generating about -0.03 per unit of risk. If you would invest 23,275 in Erie Indemnity on November 9, 2024 and sell it today you would earn a total of 18,012 from holding Erie Indemnity or generate 77.39% 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. Reliance Global Group
Performance |
| Timeline |
| Erie Indemnity |
| Reliance Global Group |
Erie Indemnity and Reliance Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erie Indemnity and Reliance Global
The main advantage of trading using opposite Erie Indemnity and Reliance Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erie Indemnity position performs unexpectedly, Reliance Global 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 Reliance Global will offset losses from the drop in Reliance Global's long position.| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. Huize Holding | Erie Indemnity vs. Crawford Company | Erie Indemnity vs. eHealth |
| Reliance Global vs. Huize Holding | Reliance Global vs. Selectquote | Reliance Global vs. eHealth | Reliance Global vs. GoHealth |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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