Correlation Between Stepan and Assurant
Can any of the company-specific risk be diversified away by investing in both Stepan and Assurant 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 Stepan and Assurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Assurant, you can compare the effects of market volatilities on Stepan and Assurant 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 Stepan with a short position of Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Assurant.
Diversification Opportunities for Stepan and Assurant
Modest diversification
The 3 months correlation between Stepan and Assurant is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and Stepan 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 Stepan Company are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Stepan i.e., Stepan and Assurant go up and down completely randomly.
Pair Corralation between Stepan and Assurant
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Assurant. In addition to that, Stepan is 1.41 times more volatile than Assurant. It trades about -0.06 of its total potential returns per unit of risk. Assurant is currently generating about 0.09 per unit of volatility. If you would invest 17,431 in Assurant on September 20, 2024 and sell it today you would earn a total of 3,333 from holding Assurant or generate 19.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Assurant
Performance |
| Timeline |
| Stepan Company |
| Assurant |
Stepan and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Assurant
The main advantage of trading using opposite Stepan and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.| Stepan vs. LyondellBasell Industries NV | Stepan vs. Cabot | Stepan vs. Westlake Chemical | Stepan vs. Air Products and |
| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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