Correlation Between Assurant and Employers Holdings

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

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

Diversification Opportunities for Assurant and Employers Holdings

0.72

Correlation Coefficient

Assurant  Employers Holdings

Poor diversification

The 3 months correlation between Assurant and Employers is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and Assurant 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 Assurant 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 Assurant i.e., Assurant and Employers Holdings go up and down completely randomly.

Pair Corralation between Assurant and Employers Holdings

Considering the 90-day investment horizon Assurant is expected to generate 2.42 times less return on investment than Employers Holdings. In addition to that, Assurant is 1.15 times more volatile than Employers Holdings. It trades about 0.01 of its total potential returns per unit of risk. Employers Holdings is currently generating about 0.03 per unit of volatility. If you would invest  3,644  in Employers Holdings on February 4, 2024 and sell it today you would earn a total of  627.00  from holding Employers Holdings or generate 17.21% return on investment over 90 days.

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

Assurant  vs.  Employers Holdings

Assurant

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Assurant is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Employers Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Employers Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Assurant and Employers Holdings

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

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.