Correlation Between ALLSTATE and Employers Holdings

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

By analyzing existing cross correlation between ALLSTATE P 42 and Employers Holdings, you can compare the effects of market volatilities on ALLSTATE and Employers Holdings 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 ALLSTATE with a short position of Employers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Employers Holdings.

Diversification Opportunities for ALLSTATE and Employers Holdings

-0.24

Correlation Coefficient

ALLSTATE  Employers Holdings

Very good diversification

The 3 months correlation between ALLSTATE and Employers is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 42 and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and ALLSTATE 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 ALLSTATE P 42 are associated (or correlated) with Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of ALLSTATE i.e., ALLSTATE and Employers Holdings go up and down completely randomly.

Pair Corralation between ALLSTATE and Employers Holdings

Assuming the 90 days trading horizon ALLSTATE P 42 is expected to under-perform the Employers Holdings. In addition to that, ALLSTATE is 4.17 times more volatile than Employers Holdings. It trades about -0.03 of its total potential returns per unit of risk. Employers Holdings is currently generating about -0.07 per unit of volatility. If you would invest  5,068  in Employers Holdings on October 22, 2024 and sell it today you would lose (87.00) from holding Employers Holdings or give up 1.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.22%
Values	Daily Returns

ALLSTATE P 42  vs.  Employers Holdings

ALLSTATE P 42

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days ALLSTATE P 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ALLSTATE P 42 investors.

Employers Holdings

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with ALLSTATE and Employers Holdings

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

The idea behind ALLSTATE P 42 and Employers Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.