Correlation Between Ionet and American Financial

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

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

Diversification Opportunities for Ionet and American Financial

0.61

Correlation Coefficient

Ionet  American Financial

Poor diversification

The 3 months correlation between Ionet and American is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ionet and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Ionet 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 ionet 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 Ionet i.e., Ionet and American Financial go up and down completely randomly.

Pair Corralation between Ionet and American Financial

Assuming the 90 days horizon ionet is expected to under-perform the American Financial. In addition to that, Ionet is 5.56 times more volatile than American Financial Group. It trades about -0.21 of its total potential returns per unit of risk. American Financial Group is currently generating about -0.04 per unit of volatility. If you would invest  13,309  in American Financial Group on December 29, 2024 and sell it today you would lose (532.00) from holding American Financial Group or give up 4.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

ionet  vs.  American Financial Group

ionet

Risk-Adjusted Performance

Very Weak

Over the last 90 days ionet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for ionet shareholders.

American Financial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ionet and American Financial

The main advantage of trading using opposite Ionet and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ionet 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 ionet 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.