Correlation Between AMERISAFE and Loews Corp

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

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

Diversification Opportunities for AMERISAFE and Loews Corp

0.82

Correlation Coefficient

AMERISAFE  Loews Corp

Very poor diversification

The 3 months correlation between AMERISAFE and Loews is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AMERISAFE and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of AMERISAFE i.e., AMERISAFE and Loews Corp go up and down completely randomly.

Pair Corralation between AMERISAFE and Loews Corp

Given the investment horizon of 90 days AMERISAFE is expected to generate 1.67 times more return on investment than Loews Corp. However, AMERISAFE is 1.67 times more volatile than Loews Corp. It trades about 0.08 of its potential returns per unit of risk. Loews Corp is currently generating about 0.09 per unit of risk. If you would invest  4,867  in AMERISAFE on September 15, 2024 and sell it today you would earn a total of  503.00  from holding AMERISAFE or generate 10.33% return on investment over 90 days.

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

AMERISAFE  vs.  Loews Corp

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 unfluctuating basic indicators, AMERISAFE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Loews Corp

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with AMERISAFE and Loews Corp

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

The idea behind AMERISAFE and Loews Corp 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.