Correlation Between American International and MSAD Insurance
Can any of the company-specific risk be diversified away by investing in both American International and MSAD Insurance 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 American International and MSAD Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American International Group and MSAD Insurance Group, you can compare the effects of market volatilities on American International and MSAD Insurance 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 American International with a short position of MSAD Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and MSAD Insurance.
Diversification Opportunities for American International and MSAD Insurance
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and MSAD is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and MSAD Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD Insurance Group and American International 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 American International Group are associated (or correlated) with MSAD Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD Insurance Group has no effect on the direction of American International i.e., American International and MSAD Insurance go up and down completely randomly.
Pair Corralation between American International and MSAD Insurance
Considering the 90-day investment horizon American International Group is expected to under-perform the MSAD Insurance. But the stock apears to be less risky and, when comparing its historical volatility, American International Group is 1.52 times less risky than MSAD Insurance. The stock trades about -0.08 of its potential returns per unit of risk. The MSAD Insurance Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,725 in MSAD Insurance Group on January 25, 2024 and sell it today you would earn a total of 42.00 from holding MSAD Insurance Group or generate 2.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.45% |
Values | Daily Returns |
American International Group vs. MSAD Insurance Group
Performance |
Timeline |
American International |
MSAD Insurance Group |
American International and MSAD Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American International and MSAD Insurance
The main advantage of trading using opposite American International and MSAD Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International position performs unexpectedly, MSAD Insurance 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 MSAD Insurance will offset losses from the drop in MSAD Insurance's long position.American International vs. Assicurazioni Generali SpA | American International vs. ageas SANV | American International vs. AXA SA |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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