Correlation Between Assurant and Intercontinental

Can any of the company-specific risk be diversified away by investing in both Assurant and Intercontinental 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 Assurant and Intercontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Assurant and Intercontinental Exchange, you can compare the effects of market volatilities on Assurant and Intercontinental 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 Assurant with a short position of Intercontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and Intercontinental.

Diversification Opportunities for Assurant and Intercontinental

-0.5

Correlation Coefficient

Assurant  Intercontinental

Very good diversification

The 3 months correlation between Assurant and Intercontinental is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and Intercontinental Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercontinental Exchange and Assurant 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 Assurant are associated (or correlated) with Intercontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercontinental Exchange has no effect on the direction of Assurant i.e., Assurant and Intercontinental go up and down completely randomly.

Pair Corralation between Assurant and Intercontinental

Considering the 90-day investment horizon Assurant is expected to generate 1.15 times more return on investment than Intercontinental. However, Assurant is 1.15 times more volatile than Intercontinental Exchange. It trades about 0.15 of its potential returns per unit of risk. Intercontinental Exchange is currently generating about -0.1 per unit of risk. If you would invest  18,890  in Assurant on October 8, 2024 and sell it today you would earn a total of  2,295  from holding Assurant or generate 12.15% return on investment over 90 days.

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

Assurant  vs.  Intercontinental Exchange

Assurant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Intercontinental Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intercontinental Exchange has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Assurant and Intercontinental

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

The idea behind Assurant and Intercontinental Exchange 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.