Correlation Between Old Republic and Employers Holdings
Can any of the company-specific risk be diversified away by investing in both Old Republic and Employers 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 Old Republic and Employers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Employers Holdings, you can compare the effects of market volatilities on Old Republic and Employers 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 Old Republic with a short position of Employers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Employers Holdings.
Diversification Opportunities for Old Republic and Employers Holdings
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and Employers is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and Old Republic 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 Old Republic International are associated (or correlated) with Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of Old Republic i.e., Old Republic and Employers Holdings go up and down completely randomly.
Pair Corralation between Old Republic and Employers Holdings
Considering the 90-day investment horizon Old Republic is expected to generate 1.02 times less return on investment than Employers Holdings. But when comparing it to its historical volatility, Old Republic International is 1.73 times less risky than Employers Holdings. It trades about 0.34 of its potential returns per unit of risk. Employers Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,825 in Employers Holdings on August 25, 2024 and sell it today you would earn a total of 500.00 from holding Employers Holdings or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Employers Holdings
Performance |
| Timeline |
| Old Republic Interna |
| Employers Holdings |
Old Republic and Employers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Employers Holdings
The main advantage of trading using opposite Old Republic and Employers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic position performs unexpectedly, Employers 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 Employers Holdings will offset losses from the drop in Employers Holdings' long position.| Old Republic vs. Fiverr International | Old Republic vs. Pinterest | Old Republic vs. Upstart Holdings | Old Republic vs. Fastly Inc |
| Employers Holdings vs. Investors Title | Employers Holdings vs. AMERISAFE | Employers Holdings vs. Essent Group | Employers Holdings vs. ICC Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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