Correlation Between AMERISAFE and Hartford Financial

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

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

Diversification Opportunities for AMERISAFE and Hartford Financial

0.22

Correlation Coefficient

AMERISAFE  Hartford Financial

Modest diversification

The 3 months correlation between AMERISAFE and Hartford is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AMERISAFE and Hartford Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Financial and AMERISAFE 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 AMERISAFE are associated (or correlated) with Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Financial has no effect on the direction of AMERISAFE i.e., AMERISAFE and Hartford Financial go up and down completely randomly.

Pair Corralation between AMERISAFE and Hartford Financial

Given the investment horizon of 90 days AMERISAFE is expected to generate 1.36 times more return on investment than Hartford Financial. However, AMERISAFE is 1.36 times more volatile than Hartford Financial Services. It trades about 0.08 of its potential returns per unit of risk. Hartford Financial Services is currently generating about -0.06 per unit of risk. If you would invest  4,788  in AMERISAFE on September 22, 2024 and sell it today you would earn a total of  459.00  from holding AMERISAFE or generate 9.59% return on investment over 90 days.

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

AMERISAFE  vs.  Hartford Financial Services

AMERISAFE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AMERISAFE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, AMERISAFE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hartford Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Hartford Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AMERISAFE and Hartford Financial

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

The idea behind AMERISAFE and Hartford Financial Services 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.