Correlation Between Loews Corp and SEP Acquisition
Can any of the company-specific risk be diversified away by investing in both Loews Corp and SEP Acquisition 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 Loews Corp and SEP Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loews Corp and SEP Acquisition Corp, you can compare the effects of market volatilities on Loews Corp and SEP Acquisition 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 Loews Corp with a short position of SEP Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and SEP Acquisition.
Diversification Opportunities for Loews Corp and SEP Acquisition
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Loews and SEP is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and SEP Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEP Acquisition Corp and Loews Corp 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 Loews Corp are associated (or correlated) with SEP Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEP Acquisition Corp has no effect on the direction of Loews Corp i.e., Loews Corp and SEP Acquisition go up and down completely randomly.
Pair Corralation between Loews Corp and SEP Acquisition
Taking into account the 90-day investment horizon Loews Corp is expected to generate 1.02 times less return on investment than SEP Acquisition. But when comparing it to its historical volatility, Loews Corp is 3.65 times less risky than SEP Acquisition. It trades about 0.07 of its potential returns per unit of risk. SEP Acquisition Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,010 in SEP Acquisition Corp on October 10, 2024 and sell it today you would earn a total of 22.00 from holding SEP Acquisition Corp or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.21% |
| Values | Daily Returns |
Loews Corp vs. SEP Acquisition Corp
Performance |
| Timeline |
| Loews Corp |
| SEP Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Loews Corp and SEP Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loews Corp and SEP Acquisition
The main advantage of trading using opposite Loews Corp and SEP Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp position performs unexpectedly, SEP Acquisition 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 SEP Acquisition will offset losses from the drop in SEP Acquisition's long position.| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
| SEP Acquisition vs. Franklin Wireless Corp | SEP Acquisition vs. Addus HomeCare | SEP Acquisition vs. Summit Materials | SEP Acquisition vs. Consol Energy |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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