Correlation Between Horace Mann and Loews Corp

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

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

Diversification Opportunities for Horace Mann and Loews Corp

0.27

Correlation Coefficient

Horace Mann  Loews Corp

Modest diversification

The 3 months correlation between Horace and Loews is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Horace Mann Educators and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp and Horace Mann 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 Horace Mann Educators are associated (or correlated) with Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Horace Mann i.e., Horace Mann and Loews Corp go up and down completely randomly.

Pair Corralation between Horace Mann and Loews Corp

Considering the 90-day investment horizon Horace Mann Educators is expected to generate 1.41 times more return on investment than Loews Corp. However, Horace Mann is 1.41 times more volatile than Loews Corp. It trades about -0.02 of its potential returns per unit of risk. Loews Corp is currently generating about -0.04 per unit of risk. If you would invest  4,153  in Horace Mann Educators on November 28, 2024 and sell it today you would lose (108.00) from holding Horace Mann Educators or give up 2.6% of portfolio value over 90 days.

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

Horace Mann Educators  vs.  Loews Corp

Horace Mann Educators

Risk-Adjusted Performance

Very Weak

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

Loews Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loews Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Horace Mann and Loews Corp

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

The idea behind Horace Mann Educators and Loews Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.