Correlation Between Maiden Holdings and American Financial
Can any of the company-specific risk be diversified away by investing in both Maiden Holdings and American Financial 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 Maiden Holdings and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maiden Holdings and American Financial Group, you can compare the effects of market volatilities on Maiden Holdings and American Financial 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 Maiden Holdings with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maiden Holdings and American Financial.
Diversification Opportunities for Maiden Holdings and American Financial
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Maiden and American is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Maiden Holdings 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 Maiden Holdings are associated (or correlated) with American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and American Financial go up and down completely randomly.
Pair Corralation between Maiden Holdings and American Financial
Given the investment horizon of 90 days Maiden Holdings is expected to generate 2.26 times more return on investment than American Financial. However, Maiden Holdings is 2.26 times more volatile than American Financial Group. It trades about 0.03 of its potential returns per unit of risk. American Financial Group is currently generating about 0.03 per unit of risk. If you would invest 1,358 in Maiden Holdings on August 31, 2024 and sell it today you would earn a total of 349.00 from holding Maiden Holdings or generate 25.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.78% |
| Values | Daily Returns |
Maiden Holdings vs. American Financial Group
Performance |
| Timeline |
| Maiden Holdings |
| American Financial |
Maiden Holdings and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maiden Holdings and American Financial
The main advantage of trading using opposite Maiden Holdings and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maiden Holdings position performs unexpectedly, American Financial 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 American Financial will offset losses from the drop in American Financial's long position.| Maiden Holdings vs. Maiden Holdings North | Maiden Holdings vs. Reinsurance Group of | Maiden Holdings vs. Entergy Arkansas LLC | Maiden Holdings vs. Entergy New Orleans |
| American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. Reinsurance Group of |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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