Correlation Between Old Republic and Loews Corp
Can any of the company-specific risk be diversified away by investing in both Old Republic and Loews Corp 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 Loews Corp 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 Loews Corp, you can compare the effects of market volatilities on Old Republic and Loews Corp 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 Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Loews Corp.
Diversification Opportunities for Old Republic and Loews Corp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and Loews is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Old Republic i.e., Old Republic and Loews Corp go up and down completely randomly.
Pair Corralation between Old Republic and Loews Corp
Considering the 90-day investment horizon Old Republic International is expected to generate 1.01 times more return on investment than Loews Corp. However, Old Republic is 1.01 times more volatile than Loews Corp. It trades about 0.14 of its potential returns per unit of risk. Loews Corp is currently generating about 0.07 per unit of risk. If you would invest 2,514 in Old Republic International on November 3, 2024 and sell it today you would earn a total of 1,144 from holding Old Republic International or generate 45.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Loews Corp
Performance |
| Timeline |
| Old Republic Interna |
| Loews Corp |
Old Republic and Loews Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Loews Corp
The main advantage of trading using opposite Old Republic and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic position performs unexpectedly, Loews Corp 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 Loews Corp will offset losses from the drop in Loews Corp's long position.| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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