Correlation Between Erie Indemnity and Marcus
Can any of the company-specific risk be diversified away by investing in both Erie Indemnity and Marcus 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 Erie Indemnity and Marcus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erie Indemnity and Marcus, you can compare the effects of market volatilities on Erie Indemnity and Marcus 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 Erie Indemnity with a short position of Marcus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and Marcus.
Diversification Opportunities for Erie Indemnity and Marcus
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Erie and Marcus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Erie Indemnity and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus and Erie Indemnity 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 Erie Indemnity are associated (or correlated) with Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of Erie Indemnity i.e., Erie Indemnity and Marcus go up and down completely randomly.
Pair Corralation between Erie Indemnity and Marcus
Given the investment horizon of 90 days Erie Indemnity is expected to generate 1.77 times more return on investment than Marcus. However, Erie Indemnity is 1.77 times more volatile than Marcus. It trades about 0.21 of its potential returns per unit of risk. Marcus is currently generating about 0.08 per unit of risk. If you would invest 34,267 in Erie Indemnity on December 29, 2023 and sell it today you would earn a total of 6,550 from holding Erie Indemnity or generate 19.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Erie Indemnity vs. Marcus
Performance |
Timeline |
Erie Indemnity |
Marcus |
Erie Indemnity and Marcus Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Erie Indemnity and Marcus
The main advantage of trading using opposite Erie Indemnity and Marcus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erie Indemnity position performs unexpectedly, Marcus 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 Marcus will offset losses from the drop in Marcus' long position.Erie Indemnity vs. Reliance Global Group | Erie Indemnity vs. EHealth | Erie Indemnity vs. Fanhua Inc | Erie Indemnity vs. Arthur J Gallagher |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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