Correlation Between American Financial and W R

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

Diversification Opportunities for American Financial and W R

-0.55

Correlation Coefficient

American Financial  W R

Excellent diversification

The 3 months correlation between American and WRB is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley 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 W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of American Financial i.e., American Financial and W R go up and down completely randomly.

Pair Corralation between American Financial and W R

Considering the 90-day investment horizon American Financial Group is expected to under-perform the W R. In addition to that, American Financial is 1.08 times more volatile than W R Berkley. It trades about -0.04 of its total potential returns per unit of risk. W R Berkley is currently generating about 0.17 per unit of volatility. If you would invest  5,845  in W R Berkley on December 28, 2024 and sell it today you would earn a total of  783.00  from holding W R Berkley or generate 13.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

American Financial Group  vs.  W R Berkley

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.

W R Berkley

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in W R Berkley are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, W R sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Financial and W R

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

The idea behind American Financial Group and W R Berkley 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.