Correlation Between Loews Corp and Atlantic American
Can any of the company-specific risk be diversified away by investing in both Loews Corp and Atlantic American 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 Loews Corp and Atlantic American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loews Corp and Atlantic American, you can compare the effects of market volatilities on Loews Corp and Atlantic American 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 Loews Corp with a short position of Atlantic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Atlantic American.
Diversification Opportunities for Loews Corp and Atlantic American
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Loews and Atlantic is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Atlantic American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic American and Loews Corp 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 Loews Corp are associated (or correlated) with Atlantic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic American has no effect on the direction of Loews Corp i.e., Loews Corp and Atlantic American go up and down completely randomly.
Pair Corralation between Loews Corp and Atlantic American
Taking into account the 90-day investment horizon Loews Corp is expected to generate 0.39 times more return on investment than Atlantic American. However, Loews Corp is 2.59 times less risky than Atlantic American. It trades about 0.05 of its potential returns per unit of risk. Atlantic American is currently generating about -0.01 per unit of risk. If you would invest 7,927 in Loews Corp on December 5, 2024 and sell it today you would earn a total of 607.00 from holding Loews Corp or generate 7.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Loews Corp vs. Atlantic American
Performance |
Timeline |
Loews Corp |
Atlantic American |
Loews Corp and Atlantic American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Loews Corp and Atlantic American
The main advantage of trading using opposite Loews Corp and Atlantic American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp position performs unexpectedly, Atlantic American 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 Atlantic American will offset losses from the drop in Atlantic American's long position.Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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