Correlation Between Assicurazioni Generali and American International

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

By analyzing existing cross correlation between Assicurazioni Generali SpA and American International Group, you can compare the effects of market volatilities on Assicurazioni Generali and American International 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 Assicurazioni Generali with a short position of American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assicurazioni Generali and American International.

Diversification Opportunities for Assicurazioni Generali and American International

0.88

Correlation Coefficient

Assicurazioni Generali  American International

Very poor diversification

The 3 months correlation between Assicurazioni and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Assicurazioni Generali SpA and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International and Assicurazioni Generali 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 Assicurazioni Generali SpA are associated (or correlated) with American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of Assicurazioni Generali i.e., Assicurazioni Generali and American International go up and down completely randomly.

Pair Corralation between Assicurazioni Generali and American International

Assuming the 90 days horizon Assicurazioni Generali SpA is expected to generate 0.83 times more return on investment than American International. However, Assicurazioni Generali SpA is 1.21 times less risky than American International. It trades about 0.33 of its potential returns per unit of risk. American International Group is currently generating about 0.2 per unit of risk. If you would invest  1,423  in Assicurazioni Generali SpA on December 29, 2024 and sell it today you would earn a total of  344.00  from holding Assicurazioni Generali SpA or generate 24.17% return on investment over 90 days.

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

Assicurazioni Generali SpA  vs.  American International Group

Assicurazioni Generali

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Assicurazioni Generali showed solid returns over the last few months and may actually be approaching a breakup point.

American International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American International Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, American International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Assicurazioni Generali and American International

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

The idea behind Assicurazioni Generali SpA and American International 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..