Correlation Between First Acceptance and Horace Mann

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

By analyzing existing cross correlation between First Acceptance Corp and Horace Mann Educators, you can compare the effects of market volatilities on First Acceptance and Horace Mann 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 First Acceptance with a short position of Horace Mann. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Acceptance and Horace Mann.

Diversification Opportunities for First Acceptance and Horace Mann

-0.5

Correlation Coefficient

First Acceptance  Horace Mann

Very good diversification

The 3 months correlation between First and Horace is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding First Acceptance Corp and Horace Mann Educators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horace Mann Educators and First Acceptance 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 First Acceptance Corp are associated (or correlated) with Horace Mann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horace Mann Educators has no effect on the direction of First Acceptance i.e., First Acceptance and Horace Mann go up and down completely randomly.

Pair Corralation between First Acceptance and Horace Mann

If you would invest  3,525  in Horace Mann Educators on August 30, 2024 and sell it today you would earn a total of  659.00  from holding Horace Mann Educators or generate 18.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

First Acceptance Corp  vs.  Horace Mann Educators

First Acceptance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Acceptance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, First Acceptance is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Horace Mann Educators

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horace Mann Educators are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Horace Mann displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Acceptance and Horace Mann

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

The idea behind First Acceptance Corp and Horace Mann Educators 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.