Correlation Between Horace Mann and Sompo Holdings
Can any of the company-specific risk be diversified away by investing in both Horace Mann and Sompo Holdings 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 Horace Mann and Sompo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horace Mann Educators and Sompo Holdings ADR, you can compare the effects of market volatilities on Horace Mann and Sompo Holdings 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 Horace Mann with a short position of Sompo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horace Mann and Sompo Holdings.
Diversification Opportunities for Horace Mann and Sompo Holdings
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Horace and Sompo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Horace Mann Educators and Sompo Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sompo Holdings ADR and Horace Mann 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 Horace Mann Educators are associated (or correlated) with Sompo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sompo Holdings ADR has no effect on the direction of Horace Mann i.e., Horace Mann and Sompo Holdings go up and down completely randomly.
Pair Corralation between Horace Mann and Sompo Holdings
Considering the 90-day investment horizon Horace Mann is expected to generate 1.55 times less return on investment than Sompo Holdings. In addition to that, Horace Mann is 1.1 times more volatile than Sompo Holdings ADR. It trades about 0.21 of its total potential returns per unit of risk. Sompo Holdings ADR is currently generating about 0.36 per unit of volatility. If you would invest 1,068 in Sompo Holdings ADR on August 30, 2024 and sell it today you would earn a total of 214.00 from holding Sompo Holdings ADR or generate 20.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horace Mann Educators vs. Sompo Holdings ADR
Performance |
| Timeline |
| Horace Mann Educators |
| Sompo Holdings ADR |
Horace Mann and Sompo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horace Mann and Sompo Holdings
The main advantage of trading using opposite Horace Mann and Sompo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horace Mann position performs unexpectedly, Sompo Holdings 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 Sompo Holdings will offset losses from the drop in Sompo Holdings' long position.| Horace Mann vs. Kemper | Horace Mann vs. RLI Corp | Horace Mann vs. Global Indemnity PLC | Horace Mann vs. Argo Group International |
| Sompo Holdings vs. Progressive Corp | Sompo Holdings vs. White Mountains Insurance | Sompo Holdings vs. Chubb | Sompo Holdings vs. W R Berkley |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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