Correlation Between American Financial and Suncorp Group
Can any of the company-specific risk be diversified away by investing in both American Financial and Suncorp Group 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 American Financial and Suncorp Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Financial Group and Suncorp Group Limited, you can compare the effects of market volatilities on American Financial and Suncorp Group 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 American Financial with a short position of Suncorp Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Suncorp Group.
Diversification Opportunities for American Financial and Suncorp Group
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Suncorp is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and Suncorp Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group Limited and American Financial 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 American Financial Group are associated (or correlated) with Suncorp Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group Limited has no effect on the direction of American Financial i.e., American Financial and Suncorp Group go up and down completely randomly.
Pair Corralation between American Financial and Suncorp Group
Assuming the 90 days horizon American Financial Group is expected to generate 1.12 times more return on investment than Suncorp Group. However, American Financial is 1.12 times more volatile than Suncorp Group Limited. It trades about 0.46 of its potential returns per unit of risk. Suncorp Group Limited is currently generating about 0.31 per unit of risk. If you would invest 11,353 in American Financial Group on September 3, 2024 and sell it today you would earn a total of 2,647 from holding American Financial Group or generate 23.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Financial Group vs. Suncorp Group Limited
Performance |
| Timeline |
| American Financial |
| Suncorp Group Limited |
American Financial and Suncorp Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Financial and Suncorp Group
The main advantage of trading using opposite American Financial and Suncorp Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Financial position performs unexpectedly, Suncorp Group 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 Suncorp Group will offset losses from the drop in Suncorp Group's long position.| American Financial vs. The Peoples Insurance | American Financial vs. Loews Corp | American Financial vs. The Hanover Insurance | American Financial vs. Superior Plus Corp |
| Suncorp Group vs. SHIP HEALTHCARE HLDGINC | Suncorp Group vs. Sabra Health Care | Suncorp Group vs. Cardinal Health | Suncorp Group vs. Australian Agricultural |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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