Correlation Between Assurant and WR Berkley

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

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

Diversification Opportunities for Assurant and WR Berkley

-0.68

Correlation Coefficient

Assurant  WR Berkley

Excellent diversification

The 3 months correlation between Assurant and WRB-PF is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and WR Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WR Berkley 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 WR Berkley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WR Berkley has no effect on the direction of Assurant i.e., Assurant and WR Berkley go up and down completely randomly.

Pair Corralation between Assurant and WR Berkley

Considering the 90-day investment horizon Assurant is expected to generate 1.49 times more return on investment than WR Berkley. However, Assurant is 1.49 times more volatile than WR Berkley. It trades about 0.14 of its potential returns per unit of risk. WR Berkley is currently generating about -0.09 per unit of risk. If you would invest  19,155  in Assurant on September 13, 2024 and sell it today you would earn a total of  2,538  from holding Assurant or generate 13.25% return on investment over 90 days.

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

Assurant  vs.  WR Berkley

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 showed solid returns over the last few months and may actually be approaching a breakup point.

WR Berkley

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Assurant and WR Berkley

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

The idea behind Assurant and WR 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.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.