Correlation Between Erie Indemnity and TWFG,

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

By analyzing existing cross correlation between Erie Indemnity and TWFG, Class A, you can compare the effects of market volatilities on Erie Indemnity and TWFG, 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 Erie Indemnity with a short position of TWFG,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and TWFG,.

Diversification Opportunities for Erie Indemnity and TWFG,

-0.83

Correlation Coefficient

Erie Indemnity  TWFG,

Pay attention - limited upside

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

Pair Corralation between Erie Indemnity and TWFG,

Given the investment horizon of 90 days Erie Indemnity is expected to generate 1.78 times less return on investment than TWFG,. But when comparing it to its historical volatility, Erie Indemnity is 1.48 times less risky than TWFG,. It trades about 0.1 of its potential returns per unit of risk. TWFG, Class A is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,201  in TWFG, Class A on September 19, 2024 and sell it today you would earn a total of  835.00  from holding TWFG, Class A or generate 37.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	27.3%
Values	Daily Returns

Erie Indemnity  vs.  TWFG, Class A

Erie Indemnity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erie Indemnity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

TWFG, Class A

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TWFG, Class A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, TWFG, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erie Indemnity and TWFG,

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

The idea behind Erie Indemnity and TWFG, Class A 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.