Correlation Between Reliance Global and Erie Indemnity
Can any of the company-specific risk be diversified away by investing in both Reliance Global and Erie Indemnity 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 Reliance Global and Erie Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Global Group and Erie Indemnity, you can compare the effects of market volatilities on Reliance Global and Erie Indemnity 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 Reliance Global with a short position of Erie Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Global and Erie Indemnity.
Diversification Opportunities for Reliance Global and Erie Indemnity
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reliance and Erie is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Global Group and Erie Indemnity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erie Indemnity and Reliance Global 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 Reliance Global Group are associated (or correlated) with Erie Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erie Indemnity has no effect on the direction of Reliance Global i.e., Reliance Global and Erie Indemnity go up and down completely randomly.
Pair Corralation between Reliance Global and Erie Indemnity
Given the investment horizon of 90 days Reliance Global Group is expected to under-perform the Erie Indemnity. In addition to that, Reliance Global is 3.72 times more volatile than Erie Indemnity. It trades about -0.17 of its total potential returns per unit of risk. Erie Indemnity is currently generating about 0.07 per unit of volatility. If you would invest 40,135 in Erie Indemnity on November 9, 2024 and sell it today you would earn a total of 1,152 from holding Erie Indemnity or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Global Group vs. Erie Indemnity
Performance |
| Timeline |
| Reliance Global Group |
| Erie Indemnity |
Reliance Global and Erie Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Global and Erie Indemnity
The main advantage of trading using opposite Reliance Global and Erie Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Global position performs unexpectedly, Erie Indemnity 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 Erie Indemnity will offset losses from the drop in Erie Indemnity's long position.| Reliance Global vs. Huize Holding | Reliance Global vs. Selectquote | Reliance Global vs. eHealth | Reliance Global vs. GoHealth |
| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. Huize Holding | Erie Indemnity vs. Crawford Company | Erie Indemnity vs. eHealth |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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