Correlation Between Assurant and Lemonade
Can any of the company-specific risk be diversified away by investing in both Assurant and Lemonade 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 Lemonade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assurant and Lemonade, you can compare the effects of market volatilities on Assurant and Lemonade 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 Lemonade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and Lemonade.
Diversification Opportunities for Assurant and Lemonade
Good diversification
The 3 months correlation between Assurant and Lemonade is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and Lemonade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemonade 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 Lemonade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemonade has no effect on the direction of Assurant i.e., Assurant and Lemonade go up and down completely randomly.
Pair Corralation between Assurant and Lemonade
Considering the 90-day investment horizon Assurant is expected to generate 0.28 times more return on investment than Lemonade. However, Assurant is 3.62 times less risky than Lemonade. It trades about -0.02 of its potential returns per unit of risk. Lemonade is currently generating about -0.03 per unit of risk. If you would invest 21,148 in Assurant on December 29, 2024 and sell it today you would lose (517.00) from holding Assurant or give up 2.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Assurant vs. Lemonade
Performance |
Timeline |
Assurant |
Lemonade |
Assurant and Lemonade Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Assurant and Lemonade
The main advantage of trading using opposite Assurant and Lemonade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assurant position performs unexpectedly, Lemonade 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 Lemonade will offset losses from the drop in Lemonade's long position.Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact Holdings |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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