Correlation Between Assurant and Carlyle

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

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

Diversification Opportunities for Assurant and Carlyle

0.83

Correlation Coefficient

Assurant  Carlyle

Very poor diversification

The 3 months correlation between Assurant and Carlyle is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and Assurant 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 Assurant are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Assurant i.e., Assurant and Carlyle go up and down completely randomly.

Pair Corralation between Assurant and Carlyle

Given the investment horizon of 90 days Assurant is expected to generate 0.83 times more return on investment than Carlyle. However, Assurant is 1.2 times less risky than Carlyle. It trades about -0.12 of its potential returns per unit of risk. The Carlyle Group is currently generating about -0.15 per unit of risk. If you would invest  2,252  in Assurant on September 26, 2024 and sell it today you would lose (152.00) from holding Assurant or give up 6.75% of portfolio value over 90 days.

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

Assurant  vs.  The Carlyle Group

Assurant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assurant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Assurant and Carlyle

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

The idea behind Assurant and The Carlyle 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.