Correlation Between ICC Holdings and Assurant

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

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

Diversification Opportunities for ICC Holdings and Assurant

0.27

Correlation Coefficient

ICC Holdings  Assurant

Modest diversification

The 3 months correlation between ICC and Assurant is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ICC Holdings and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and ICC Holdings 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 ICC Holdings 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 ICC Holdings i.e., ICC Holdings and Assurant go up and down completely randomly.

Pair Corralation between ICC Holdings and Assurant

Given the investment horizon of 90 days ICC Holdings is expected to generate 0.5 times more return on investment than Assurant. However, ICC Holdings is 2.01 times less risky than Assurant. It trades about 0.03 of its potential returns per unit of risk. Assurant is currently generating about 0.01 per unit of risk. If you would invest  2,329  in ICC Holdings on December 28, 2024 and sell it today you would earn a total of  20.00  from holding ICC Holdings or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.33%
Values	Daily Returns

ICC Holdings  vs.  Assurant

ICC Holdings

Risk-Adjusted Performance

Weak

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

Assurant

Risk-Adjusted Performance

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 fairly strong forward indicators, Assurant is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ICC Holdings and Assurant

The main advantage of trading using opposite ICC Holdings and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICC Holdings 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 ICC Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.