Correlation Between Associated Capital and Assurant

Can any of the company-specific risk be diversified away by investing in both Associated Capital 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 Associated Capital and Assurant into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Capital Group and Assurant, you can compare the effects of market volatilities on Associated Capital 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 Associated Capital with a short position of Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Assurant.

Diversification Opportunities for Associated Capital and Assurant

-0.2

Correlation Coefficient

Associated Capital  Assurant

Good diversification

The 3 months correlation between Associated and Assurant is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and Associated Capital 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 Associated Capital 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 Associated Capital i.e., Associated Capital and Assurant go up and down completely randomly.

Pair Corralation between Associated Capital and Assurant

Allowing for the 90-day total investment horizon Associated Capital Group is expected to under-perform the Assurant. But the stock apears to be less risky and, when comparing its historical volatility, Associated Capital Group is 1.04 times less risky than Assurant. The stock trades about -0.02 of its potential returns per unit of risk. The Assurant is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  14,511  in Assurant on February 1, 2024 and sell it today you would earn a total of  2,929  from holding Assurant or generate 20.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Associated Capital Group  vs.  Assurant

Associated Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Assurant

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Assurant is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Associated Capital and Assurant

The main advantage of trading using opposite Associated Capital and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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.

The idea behind Associated Capital Group and Assurant 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.