Correlation Between CNA Financial and Loews Corp
Can any of the company-specific risk be diversified away by investing in both CNA Financial 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 CNA Financial and Loews Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNA Financial and Loews Corp, you can compare the effects of market volatilities on CNA Financial 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 CNA Financial with a short position of Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNA Financial and Loews Corp.
Diversification Opportunities for CNA Financial and Loews Corp
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CNA and Loews is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CNA Financial and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp and CNA Financial 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 CNA Financial 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 CNA Financial i.e., CNA Financial and Loews Corp go up and down completely randomly.
Pair Corralation between CNA Financial and Loews Corp
Considering the 90-day investment horizon CNA Financial is expected to generate 1.22 times more return on investment than Loews Corp. However, CNA Financial is 1.22 times more volatile than Loews Corp. It trades about -0.1 of its potential returns per unit of risk. Loews Corp is currently generating about -0.32 per unit of risk. If you would invest 4,430 in CNA Financial on January 20, 2024 and sell it today you would lose (96.00) from holding CNA Financial or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
CNA Financial vs. Loews Corp
Performance |
| Timeline |
| CNA Financial |
| Loews Corp |
CNA Financial and Loews Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNA Financial and Loews Corp
The main advantage of trading using opposite CNA Financial and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNA Financial 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.| CNA Financial vs. Selective Insurance Group | CNA Financial vs. Kemper | CNA Financial vs. Donegal Group B | CNA Financial vs. Argo Group International |
| Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper | Loews Corp vs. Stewart Information Services |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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