Correlation Between Erie Indemnity and Arthur J
Can any of the company-specific risk be diversified away by investing in both Erie Indemnity and Arthur J 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 Arthur J into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erie Indemnity and Arthur J Gallagher, you can compare the effects of market volatilities on Erie Indemnity and Arthur J 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 Arthur J. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and Arthur J.
Diversification Opportunities for Erie Indemnity and Arthur J
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erie and Arthur is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Erie Indemnity and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher 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 Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Erie Indemnity i.e., Erie Indemnity and Arthur J go up and down completely randomly.
Pair Corralation between Erie Indemnity and Arthur J
Given the investment horizon of 90 days Erie Indemnity is expected to generate 0.88 times more return on investment than Arthur J. However, Erie Indemnity is 1.14 times less risky than Arthur J. It trades about -0.31 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about -0.31 per unit of risk. If you would invest 40,489 in Erie Indemnity on January 20, 2024 and sell it today you would lose (2,443) from holding Erie Indemnity or give up 6.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Erie Indemnity vs. Arthur J Gallagher
Performance |
| Timeline |
| Erie Indemnity |
| Arthur J Gallagher |
Erie Indemnity and Arthur J Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erie Indemnity and Arthur J
The main advantage of trading using opposite Erie Indemnity and Arthur J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erie Indemnity position performs unexpectedly, Arthur J 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 Arthur J will offset losses from the drop in Arthur J's long position.| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. eHealth | Erie Indemnity vs. Fanhua Inc | Erie Indemnity vs. Brp Group |
| Arthur J vs. Erie Indemnity | Arthur J vs. Crawford Company | Arthur J vs. Crawford Company | Arthur J vs. CorVel Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |