Correlation Between Peoples Insurance and American Financial
Can any of the company-specific risk be diversified away by investing in both Peoples Insurance 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 Peoples Insurance and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Peoples Insurance and American Financial Group, you can compare the effects of market volatilities on Peoples Insurance 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 Peoples Insurance with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Insurance and American Financial.
Diversification Opportunities for Peoples Insurance and American Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Peoples and American is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Peoples Insurance and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Peoples 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 The Peoples Insurance 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 Peoples Insurance i.e., Peoples Insurance and American Financial go up and down completely randomly.
Pair Corralation between Peoples Insurance and American Financial
Assuming the 90 days horizon The Peoples Insurance is expected to generate 5.09 times more return on investment than American Financial. However, Peoples Insurance is 5.09 times more volatile than American Financial Group. It trades about 0.08 of its potential returns per unit of risk. American Financial Group is currently generating about 0.1 per unit of risk. If you would invest 14.00 in The Peoples Insurance on September 4, 2024 and sell it today you would earn a total of 25.00 from holding The Peoples Insurance or generate 178.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Peoples Insurance vs. American Financial Group
Performance |
| Timeline |
| Peoples Insurance |
| American Financial |
Peoples Insurance and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peoples Insurance and American Financial
The main advantage of trading using opposite Peoples Insurance and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Insurance 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.| Peoples Insurance vs. Loews Corp | Peoples Insurance vs. The Hanover Insurance | Peoples Insurance vs. Superior Plus Corp | Peoples Insurance vs. NMI Holdings |
| American Financial vs. AIR PRODCHEMICALS | American Financial vs. SHIN ETSU CHEMICAL | American Financial vs. Westlake Chemical | American Financial vs. Sanyo Chemical Industries |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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