Correlation Between Suncorp Group and Loews Corp

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

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

Diversification Opportunities for Suncorp Group and Loews Corp

0.76

Correlation Coefficient

Suncorp Group  Loews Corp

Poor diversification

The 3 months correlation between Suncorp and Loews is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Suncorp Group Limited and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp and Suncorp Group 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 Suncorp Group Limited are associated (or correlated) with Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Suncorp Group i.e., Suncorp Group and Loews Corp go up and down completely randomly.

Pair Corralation between Suncorp Group and Loews Corp

Assuming the 90 days horizon Suncorp Group Limited is expected to under-perform the Loews Corp. In addition to that, Suncorp Group is 2.53 times more volatile than Loews Corp. It trades about -0.12 of its total potential returns per unit of risk. Loews Corp is currently generating about -0.13 per unit of volatility. If you would invest  8,250  in Loews Corp on October 2, 2024 and sell it today you would lose (200.00) from holding Loews Corp or give up 2.42% of portfolio value over 90 days.

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

Suncorp Group Limited  vs.  Loews Corp

Suncorp Group Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suncorp Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Suncorp Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Loews Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Loews Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Suncorp Group and Loews Corp

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

The idea behind Suncorp Group Limited and Loews Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.