Correlation Between Great Elm and Assurant

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

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

Diversification Opportunities for Great Elm and Assurant

-0.33

Correlation Coefficient

Great Elm  Assurant

Very good diversification

The 3 months correlation between Great and Assurant is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Group and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and Great Elm 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 Great Elm Group 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 Great Elm i.e., Great Elm and Assurant go up and down completely randomly.

Pair Corralation between Great Elm and Assurant

Assuming the 90 days horizon Great Elm Group is expected to generate 1.26 times more return on investment than Assurant. However, Great Elm is 1.26 times more volatile than Assurant. It trades about -0.02 of its potential returns per unit of risk. Assurant is currently generating about -0.08 per unit of risk. If you would invest  2,394  in Great Elm Group on September 22, 2024 and sell it today you would lose (13.00) from holding Great Elm Group or give up 0.54% of portfolio value over 90 days.

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

Great Elm Group  vs.  Assurant

Great Elm Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great Elm Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Great Elm is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 Great Elm and Assurant

The main advantage of trading using opposite Great Elm and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm 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 Great Elm Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.