Correlation Between EHealth and Erie Indemnity
Can any of the company-specific risk be diversified away by investing in both EHealth and Erie Indemnity 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 EHealth and Erie Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eHealth and Erie Indemnity, you can compare the effects of market volatilities on EHealth and Erie Indemnity 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 EHealth with a short position of Erie Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHealth and Erie Indemnity.
Diversification Opportunities for EHealth and Erie Indemnity
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EHealth and Erie is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding eHealth and Erie Indemnity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erie Indemnity and EHealth 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 eHealth are associated (or correlated) with Erie Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erie Indemnity has no effect on the direction of EHealth i.e., EHealth and Erie Indemnity go up and down completely randomly.
Pair Corralation between EHealth and Erie Indemnity
Given the investment horizon of 90 days eHealth is expected to under-perform the Erie Indemnity. In addition to that, EHealth is 4.62 times more volatile than Erie Indemnity. It trades about -0.33 of its total potential returns per unit of risk. Erie Indemnity is currently generating about -0.38 per unit of volatility. If you would invest 40,687 in Erie Indemnity on January 27, 2024 and sell it today you would lose (2,661) from holding Erie Indemnity or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
eHealth vs. Erie Indemnity
Performance |
| Timeline |
| eHealth |
| Erie Indemnity |
EHealth and Erie Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHealth and Erie Indemnity
The main advantage of trading using opposite EHealth and Erie Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHealth position performs unexpectedly, Erie Indemnity 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 Erie Indemnity will offset losses from the drop in Erie Indemnity's long position.| EHealth vs. Willis Towers Watson | EHealth vs. Erie Indemnity | EHealth vs. CorVel Corp | EHealth vs. Huize HoldingLtd |
| Erie Indemnity vs. eHealth | Erie Indemnity vs. Fanhua Inc | Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. Brown Brown |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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