Correlation Between American International and Assurant
Can any of the company-specific risk be diversified away by investing in both American International and Assurant 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 Assurant 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 Assurant, you can compare the effects of market volatilities on American International and Assurant 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 Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and Assurant.
Diversification Opportunities for American International and Assurant
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Assurant is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of American International i.e., American International and Assurant go up and down completely randomly.
Pair Corralation between American International and Assurant
Considering the 90-day investment horizon American International Group is expected to generate 0.93 times more return on investment than Assurant. However, American International Group is 1.08 times less risky than Assurant. It trades about 0.07 of its potential returns per unit of risk. Assurant is currently generating about 0.05 per unit of risk. If you would invest 5,239 in American International Group on January 19, 2024 and sell it today you would earn a total of 2,019 from holding American International Group or generate 38.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American International Group vs. Assurant
Performance |
| Timeline |
| American International |
| Assurant |
American International and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American International and Assurant
The main advantage of trading using opposite American International and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.| American International vs. Assicurazioni Generali SpA | American International vs. ageas SANV | American International vs. AXA SA |
| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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