Correlation Between Gentex and American Financial

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

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

Diversification Opportunities for Gentex and American Financial

0.0

Correlation Coefficient

Gentex  American Financial

Pay attention - limited upside

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

Pair Corralation between Gentex and American Financial

If you would invest  11,666  in American Financial Group on October 2, 2024 and sell it today you would earn a total of  1,334  from holding American Financial Group or generate 11.43% return on investment over 90 days.

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

Gentex  vs.  American Financial Group

Gentex

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gentex is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

American Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, American Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gentex and American Financial

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

The idea behind Gentex and American Financial 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.

Check out your portfolio center.

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.