Correlation Between Erie Indemnity and CorVel Corp
Can any of the company-specific risk be diversified away by investing in both Erie Indemnity and CorVel Corp 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 CorVel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erie Indemnity and CorVel Corp, you can compare the effects of market volatilities on Erie Indemnity and CorVel Corp 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 CorVel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and CorVel Corp.
Diversification Opportunities for Erie Indemnity and CorVel Corp
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Erie and CorVel is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Erie Indemnity and CorVel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CorVel Corp 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 CorVel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CorVel Corp has no effect on the direction of Erie Indemnity i.e., Erie Indemnity and CorVel Corp go up and down completely randomly.
Pair Corralation between Erie Indemnity and CorVel Corp
Given the investment horizon of 90 days Erie Indemnity is expected to generate 1.01 times more return on investment than CorVel Corp. However, Erie Indemnity is 1.01 times more volatile than CorVel Corp. It trades about 0.11 of its potential returns per unit of risk. CorVel Corp is currently generating about 0.06 per unit of risk. If you would invest 15,783 in Erie Indemnity on February 3, 2024 and sell it today you would earn a total of 22,711 from holding Erie Indemnity or generate 143.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Erie Indemnity vs. CorVel Corp
Performance |
Timeline |
Erie Indemnity |
CorVel Corp |
Erie Indemnity and CorVel Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Erie Indemnity and CorVel Corp
The main advantage of trading using opposite Erie Indemnity and CorVel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erie Indemnity position performs unexpectedly, CorVel Corp 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 CorVel Corp will offset losses from the drop in CorVel Corp's long position.Erie Indemnity vs. eHealth | Erie Indemnity vs. Fanhua Inc | Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. Brown Brown |
CorVel Corp vs. Erie Indemnity | CorVel Corp vs. Huize HoldingLtd | CorVel Corp vs. Crawford Company | CorVel Corp vs. eHealth |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |