Correlation Between American International and Enstar Group
Can any of the company-specific risk be diversified away by investing in both American International and Enstar Group 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 Enstar Group 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 Enstar Group Limited, you can compare the effects of market volatilities on American International and Enstar Group 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 Enstar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and Enstar Group.
Diversification Opportunities for American International and Enstar Group
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Enstar is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and Enstar Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enstar Group Limited 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 Enstar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enstar Group Limited has no effect on the direction of American International i.e., American International and Enstar Group go up and down completely randomly.
Pair Corralation between American International and Enstar Group
Considering the 90-day investment horizon American International Group is expected to generate 0.78 times more return on investment than Enstar Group. However, American International Group is 1.28 times less risky than Enstar Group. It trades about -0.2 of its potential returns per unit of risk. Enstar Group Limited is currently generating about -0.28 per unit of risk. If you would invest 7,674 in American International Group on January 20, 2024 and sell it today you would lose (375.00) from holding American International Group or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American International Group vs. Enstar Group Limited
Performance |
| Timeline |
| American International |
| Enstar Group Limited |
American International and Enstar Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American International and Enstar Group
The main advantage of trading using opposite American International and Enstar Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International position performs unexpectedly, Enstar Group 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 Enstar Group will offset losses from the drop in Enstar Group's long position.| American International vs. Axa Equitable Holdings | American International vs. Arch Capital Group | American International vs. Old Republic International | American International vs. Sun Life Financial |
| Enstar Group vs. Global Indemnity PLC | Enstar Group vs. Erie Indemnity | Enstar Group vs. National Western Life | Enstar Group vs. AMERISAFE |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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