Correlation Between White Mountains and Assurant
Can any of the company-specific risk be diversified away by investing in both White Mountains 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 White Mountains and Assurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between White Mountains Insurance and Assurant, you can compare the effects of market volatilities on White Mountains 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 White Mountains with a short position of Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Mountains and Assurant.
Diversification Opportunities for White Mountains and Assurant
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between White and Assurant is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and White Mountains 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 White Mountains Insurance 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 White Mountains i.e., White Mountains and Assurant go up and down completely randomly.
Pair Corralation between White Mountains and Assurant
Considering the 90-day investment horizon White Mountains is expected to generate 2.04 times less return on investment than Assurant. In addition to that, White Mountains is 1.11 times more volatile than Assurant. It trades about 0.08 of its total potential returns per unit of risk. Assurant is currently generating about 0.19 per unit of volatility. If you would invest 16,726 in Assurant on August 24, 2024 and sell it today you would earn a total of 5,796 from holding Assurant or generate 34.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
White Mountains Insurance vs. Assurant
Performance |
| Timeline |
| White Mountains Insurance |
| Assurant |
White Mountains and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with White Mountains and Assurant
The main advantage of trading using opposite White Mountains and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains 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.| White Mountains vs. NI Holdings | White Mountains vs. Donegal Group A | White Mountains vs. Donegal Group B | White Mountains vs. The Hanover Insurance |
| Assurant vs. MBIA Inc | Assurant vs. NMI Holdings | Assurant vs. Employers Holdings | Assurant vs. James River Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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