Correlation Between Horace Mann and RLI Corp

Can any of the company-specific risk be diversified away by investing in both Horace Mann and RLI 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 RLI 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 RLI Corp, you can compare the effects of market volatilities on Horace Mann and RLI 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 RLI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horace Mann and RLI Corp.

Diversification Opportunities for Horace Mann and RLI Corp

0.92

Correlation Coefficient

Horace Mann  RLI Corp

Almost no diversification

The 3 months correlation between Horace and RLI is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Horace Mann Educators and RLI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLI 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 RLI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLI Corp has no effect on the direction of Horace Mann i.e., Horace Mann and RLI Corp go up and down completely randomly.

Pair Corralation between Horace Mann and RLI Corp

Considering the 90-day investment horizon Horace Mann Educators is expected to generate 1.43 times more return on investment than RLI Corp. However, Horace Mann is 1.43 times more volatile than RLI Corp. It trades about 0.15 of its potential returns per unit of risk. RLI Corp is currently generating about 0.19 per unit of risk. 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 Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Horace Mann Educators  vs.  RLI Corp

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.

RLI Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RLI Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, RLI Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Horace Mann and RLI Corp

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

The idea behind Horace Mann Educators and RLI 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.