Correlation Between ProAssurance and Nissan

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

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

Diversification Opportunities for ProAssurance and Nissan

-0.32

Correlation Coefficient

ProAssurance  Nissan

Very good diversification

The 3 months correlation between ProAssurance and Nissan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ProAssurance and Nissan Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Motor and ProAssurance 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 ProAssurance are associated (or correlated) with Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan Motor has no effect on the direction of ProAssurance i.e., ProAssurance and Nissan go up and down completely randomly.

Pair Corralation between ProAssurance and Nissan

Considering the 90-day investment horizon ProAssurance is expected to generate 4.51 times less return on investment than Nissan. But when comparing it to its historical volatility, ProAssurance is 3.09 times less risky than Nissan. It trades about 0.03 of its potential returns per unit of risk. Nissan Motor Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  273.00  in Nissan Motor Co on October 11, 2024 and sell it today you would earn a total of  20.00  from holding Nissan Motor Co or generate 7.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ProAssurance  vs.  Nissan Motor Co

ProAssurance

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProAssurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ProAssurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nissan Motor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nissan Motor Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nissan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProAssurance and Nissan

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

The idea behind ProAssurance and Nissan Motor Co 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.