Correlation Between Enact Holdings and Horace Mann

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

By analyzing existing cross correlation between Enact Holdings and Horace Mann Educators, you can compare the effects of market volatilities on Enact Holdings and Horace Mann 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 Enact Holdings with a short position of Horace Mann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enact Holdings and Horace Mann.

Diversification Opportunities for Enact Holdings and Horace Mann

-0.6

Correlation Coefficient

Enact Holdings  Horace Mann

Excellent diversification

The 3 months correlation between Enact and Horace is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Enact Holdings and Horace Mann Educators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horace Mann Educators and Enact Holdings 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 Enact Holdings are associated (or correlated) with Horace Mann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horace Mann Educators has no effect on the direction of Enact Holdings i.e., Enact Holdings and Horace Mann go up and down completely randomly.

Pair Corralation between Enact Holdings and Horace Mann

Considering the 90-day investment horizon Enact Holdings is expected to generate 78.3 times less return on investment than Horace Mann. But when comparing it to its historical volatility, Enact Holdings is 1.47 times less risky than Horace Mann. It trades about 0.0 of its potential returns per unit of risk. Horace Mann Educators is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,525  in Horace Mann Educators on August 30, 2024 and sell it today you would earn a total of  659.00  from holding Horace Mann Educators or generate 18.7% return on investment over 90 days.

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

Enact Holdings  vs.  Horace Mann Educators

Enact Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enact Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Enact Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Horace Mann Educators

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horace Mann Educators are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Horace Mann displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enact Holdings and Horace Mann

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

The idea behind Enact Holdings and Horace Mann Educators 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.