Correlation Between MSAD Insurance and Sompo Holdings
Can any of the company-specific risk be diversified away by investing in both MSAD Insurance 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 MSAD Insurance and Sompo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSAD Insurance Group and Sompo Holdings ADR, you can compare the effects of market volatilities on MSAD Insurance 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 MSAD Insurance with a short position of Sompo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD Insurance and Sompo Holdings.
Diversification Opportunities for MSAD Insurance and Sompo Holdings
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MSAD and Sompo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MSAD Insurance Group 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 MSAD Insurance 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 MSAD Insurance Group 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 MSAD Insurance i.e., MSAD Insurance and Sompo Holdings go up and down completely randomly.
Pair Corralation between MSAD Insurance and Sompo Holdings
Assuming the 90 days horizon MSAD Insurance is expected to generate 1.31 times less return on investment than Sompo Holdings. In addition to that, MSAD Insurance is 1.39 times more volatile than Sompo Holdings ADR. It trades about 0.05 of its total potential returns per unit of risk. Sompo Holdings ADR is currently generating about 0.09 per unit of volatility. If you would invest 1,022 in Sompo Holdings ADR on September 3, 2024 and sell it today you would earn a total of 300.00 from holding Sompo Holdings ADR or generate 29.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSAD Insurance Group vs. Sompo Holdings ADR
Performance |
| Timeline |
| MSAD Insurance Group |
| Sompo Holdings ADR |
MSAD Insurance and Sompo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSAD Insurance and Sompo Holdings
The main advantage of trading using opposite MSAD Insurance and Sompo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSAD Insurance 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.| MSAD Insurance vs. MSAD Insurance Group | MSAD Insurance vs. Sompo Holdings ADR | MSAD Insurance vs. The Allstate | MSAD Insurance vs. Horace Mann Educators |
| Sompo Holdings vs. AmTrust Financial Services | Sompo Holdings vs. AmTrust Financial Services | Sompo Holdings vs. AmTrust Financial Services | Sompo Holdings vs. AmTrust Financial Services |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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