Correlation Between Loews Corp and American National

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

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

Diversification Opportunities for Loews Corp and American National

0.89

Correlation Coefficient

Loews Corp  American National

Very poor diversification

The 3 months correlation between Loews and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and American National Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American National and Loews Corp 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 Loews Corp are associated (or correlated) with American National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American National has no effect on the direction of Loews Corp i.e., Loews Corp and American National go up and down completely randomly.

Pair Corralation between Loews Corp and American National

Taking into account the 90-day investment horizon Loews Corp is expected to under-perform the American National. In addition to that, Loews Corp is 2.42 times more volatile than American National Group. It trades about -0.18 of its total potential returns per unit of risk. American National Group is currently generating about 0.14 per unit of volatility. If you would invest  2,500  in American National Group on September 19, 2024 and sell it today you would earn a total of  27.00  from holding American National Group or generate 1.08% return on investment over 90 days.

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

Loews Corp  vs.  American National Group

Loews Corp

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

American National

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American National Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, American National is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Loews Corp and American National

The main advantage of trading using opposite Loews Corp and American National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp position performs unexpectedly, American National 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 National will offset losses from the drop in American National's long position.

The idea behind Loews Corp and American National 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.