Correlation Between American Financial and Maiden Holdings

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

By analyzing existing cross correlation between American Financial Group and Maiden Holdings North, you can compare the effects of market volatilities on American Financial and Maiden Holdings 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 American Financial with a short position of Maiden Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Maiden Holdings.

Diversification Opportunities for American Financial and Maiden Holdings

-0.39

Correlation Coefficient

American Financial  Maiden Holdings

Very good diversification

The 3 months correlation between American and Maiden is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and Maiden Holdings North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings North and American Financial 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 American Financial Group are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings North has no effect on the direction of American Financial i.e., American Financial and Maiden Holdings go up and down completely randomly.

Pair Corralation between American Financial and Maiden Holdings

Given the investment horizon of 90 days American Financial Group is expected to generate 0.56 times more return on investment than Maiden Holdings. However, American Financial Group is 1.79 times less risky than Maiden Holdings. It trades about 0.11 of its potential returns per unit of risk. Maiden Holdings North is currently generating about 0.04 per unit of risk. If you would invest  2,098  in American Financial Group on May 7, 2025 and sell it today you would earn a total of  72.00  from holding American Financial Group or generate 3.43% return on investment over 90 days.

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

American Financial Group  vs.  Maiden Holdings North

American Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in American Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, American Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Maiden Holdings North

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maiden Holdings North are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Maiden Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Financial and Maiden Holdings

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

The idea behind American Financial Group and Maiden Holdings North 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.