Correlation Between American Financial and SPACE

Can any of the company-specific risk be diversified away by investing in both American Financial and SPACE 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 SPACE 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 SPACE, you can compare the effects of market volatilities on American Financial and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and SPACE.

Diversification Opportunities for American Financial and SPACE

0.48

Correlation Coefficient

American Financial  SPACE

Very weak diversification

The 3 months correlation between American and SPACE is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of American Financial i.e., American Financial and SPACE go up and down completely randomly.

Pair Corralation between American Financial and SPACE

Considering the 90-day investment horizon American Financial Group is expected to generate 0.22 times more return on investment than SPACE. However, American Financial Group is 4.65 times less risky than SPACE. It trades about -0.04 of its potential returns per unit of risk. SPACE is currently generating about -0.12 per unit of risk. If you would invest  13,309  in American Financial Group on December 29, 2024 and sell it today you would lose (532.00) from holding American Financial Group or give up 4.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

American Financial Group  vs.  SPACE

American Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, American Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SPACE shareholders.

Pair Trading with American Financial and SPACE

The main advantage of trading using opposite American Financial and SPACE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Financial position performs unexpectedly, SPACE 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 SPACE will offset losses from the drop in SPACE's long position.

The idea behind American Financial Group and SPACE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.