Correlation Between Assurant and James River

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

By analyzing existing cross correlation between Assurant and James River Group, you can compare the effects of market volatilities on Assurant and James River 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 James River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and James River.

Diversification Opportunities for Assurant and James River

-0.86

Correlation Coefficient

Assurant  James River

Pay attention - limited upside

The 3 months correlation between Assurant and James is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and James River Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James River Group 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 James River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James River Group has no effect on the direction of Assurant i.e., Assurant and James River go up and down completely randomly.

Pair Corralation between Assurant and James River

Considering the 90-day investment horizon Assurant is expected to generate 0.24 times more return on investment than James River. However, Assurant is 4.24 times less risky than James River. It trades about -0.01 of its potential returns per unit of risk. James River Group is currently generating about -0.14 per unit of risk. If you would invest  20,864  in Assurant on October 9, 2024 and sell it today you would lose (98.00) from holding Assurant or give up 0.47% of portfolio value over 90 days.

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

Assurant  vs.  James River Group

Assurant

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 8 (%) 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.

James River Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days James River Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Assurant and James River

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

The idea behind Assurant and James River Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.