Correlation Between Loews Corp and Aviva PLC

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

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

Diversification Opportunities for Loews Corp and Aviva PLC

-0.7

Correlation Coefficient

Loews Corp  Aviva PLC

Excellent diversification

The 3 months correlation between Loews and Aviva is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Aviva PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aviva PLC ADR 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 Aviva PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aviva PLC ADR has no effect on the direction of Loews Corp i.e., Loews Corp and Aviva PLC go up and down completely randomly.

Pair Corralation between Loews Corp and Aviva PLC

If you would invest  7,861  in Loews Corp on September 23, 2024 and sell it today you would earn a total of  458.00  from holding Loews Corp or generate 5.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Loews Corp  vs.  Aviva PLC ADR

Loews Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 5 (%) 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.

Aviva PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aviva PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Aviva PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Loews Corp and Aviva PLC

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

The idea behind Loews Corp and Aviva PLC ADR 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.