Correlation Between EHealth and Assurant

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

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

Diversification Opportunities for EHealth and Assurant

-0.75

Correlation Coefficient

EHealth  Assurant

Pay attention - limited upside

The 3 months correlation between EHealth and Assurant is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding eHealth and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and EHealth 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 eHealth are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of EHealth i.e., EHealth and Assurant go up and down completely randomly.

Pair Corralation between EHealth and Assurant

Given the investment horizon of 90 days eHealth is expected to generate 6.37 times more return on investment than Assurant. However, EHealth is 6.37 times more volatile than Assurant. It trades about 0.12 of its potential returns per unit of risk. Assurant is currently generating about 0.01 per unit of risk. If you would invest  432.00  in eHealth on October 4, 2024 and sell it today you would earn a total of  425.00  from holding eHealth or generate 98.38% return on investment over 90 days.

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

eHealth  vs.  Assurant

eHealth

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in eHealth are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, EHealth demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Assurant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assurant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with EHealth and Assurant

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

The idea behind eHealth and Assurant 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.