Correlation Between Marcus and American Financial

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Can any of the company-specific risk be diversified away by investing in both Marcus and American Financial 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 Marcus and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marcus and American Financial Group, you can compare the effects of market volatilities on Marcus and American Financial 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 Marcus with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marcus and American Financial.

Diversification Opportunities for Marcus and American Financial

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Marcus and American is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Marcus and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Marcus 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 Marcus are associated (or correlated) with American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of Marcus i.e., Marcus and American Financial go up and down completely randomly.

Pair Corralation between Marcus and American Financial

Considering the 90-day investment horizon Marcus is expected to under-perform the American Financial. In addition to that, Marcus is 1.31 times more volatile than American Financial Group. It trades about -0.02 of its total potential returns per unit of risk. American Financial Group is currently generating about 0.07 per unit of volatility. If you would invest  9,439  in American Financial Group on October 29, 2022 and sell it today you would earn a total of  4,581  from holding American Financial Group or generate 48.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Marcus  vs.  American Financial Group

 Performance (%) 
       Timeline  
Marcus 
Marcus Performance
0 of 100
Over the last 90 days Marcus has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Marcus is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Marcus Price Channel

American Financial 
American Performance
0 of 100
Over the last 90 days American Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, American Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

American Price Channel

Marcus and American Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marcus and American Financial

The main advantage of trading using opposite Marcus and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcus position performs unexpectedly, American Financial 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 American Financial will offset losses from the drop in American Financial's long position.
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The idea behind Marcus and American Financial Group 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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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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