Correlation Between Kemper and ProAssurance

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

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

Diversification Opportunities for Kemper and ProAssurance

-0.46

Correlation Coefficient

Kemper  ProAssurance

Very good diversification

The 3 months correlation between Kemper and ProAssurance is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kemper and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance and Kemper 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 Kemper are associated (or correlated) with ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of Kemper i.e., Kemper and ProAssurance go up and down completely randomly.

Pair Corralation between Kemper and ProAssurance

Given the investment horizon of 90 days Kemper is expected to generate 5.26 times more return on investment than ProAssurance. However, Kemper is 5.26 times more volatile than ProAssurance. It trades about 0.17 of its potential returns per unit of risk. ProAssurance is currently generating about 0.0 per unit of risk. If you would invest  5,611  in Kemper on March 6, 2025 and sell it today you would earn a total of  789.00  from holding Kemper or generate 14.06% return on investment over 90 days.

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

Kemper  vs.  ProAssurance

Kemper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kemper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kemper is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

ProAssurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProAssurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ProAssurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kemper and ProAssurance

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

The idea behind Kemper and ProAssurance 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.