Correlation Between FANH Old and Erie Indemnity

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

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

Diversification Opportunities for FANH Old and Erie Indemnity

0.0

Correlation Coefficient

FANH Old  Erie Indemnity

Pay attention - limited upside

The 3 months correlation between FANH and Erie is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FANH Old and Erie Indemnity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erie Indemnity and FANH Old 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 FANH Old are associated (or correlated) with Erie Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erie Indemnity has no effect on the direction of FANH Old i.e., FANH Old and Erie Indemnity go up and down completely randomly.

Pair Corralation between FANH Old and Erie Indemnity

If you would invest  40,700  in Erie Indemnity on December 19, 2024 and sell it today you would earn a total of  1,104  from holding Erie Indemnity or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FANH Old  vs.  Erie Indemnity

FANH Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days FANH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, FANH Old is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Erie Indemnity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Erie Indemnity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Erie Indemnity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FANH Old and Erie Indemnity

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

The idea behind FANH Old and Erie Indemnity 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.