Correlation Between Pekin Life and Assurant

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

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

Diversification Opportunities for Pekin Life and Assurant

0.8

Correlation Coefficient

Pekin Life  Assurant

Very poor diversification

The 3 months correlation between Pekin and Assurant is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and Pekin Life 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 Pekin Life Insurance 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 Pekin Life i.e., Pekin Life and Assurant go up and down completely randomly.

Pair Corralation between Pekin Life and Assurant

Given the investment horizon of 90 days Pekin Life Insurance is expected to generate 0.02 times more return on investment than Assurant. However, Pekin Life Insurance is 60.45 times less risky than Assurant. It trades about 0.22 of its potential returns per unit of risk. Assurant is currently generating about -0.15 per unit of risk. If you would invest  1,175  in Pekin Life Insurance on September 21, 2024 and sell it today you would earn a total of  1.00  from holding Pekin Life Insurance or generate 0.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Pekin Life Insurance  vs.  Assurant

Pekin Life Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Assurant

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pekin Life and Assurant

The main advantage of trading using opposite Pekin Life and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life 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 Pekin Life Insurance 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.