Correlation Between Lancashire Holdings and Mapfre SA

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

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

Diversification Opportunities for Lancashire Holdings and Mapfre SA

0.42

Correlation Coefficient

Lancashire Holdings  Mapfre SA

Very weak diversification

The 3 months correlation between Lancashire and Mapfre is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lancashire Holdings Limited and Mapfre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre SA and Lancashire 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 Lancashire Holdings Limited are associated (or correlated) with Mapfre SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre SA has no effect on the direction of Lancashire Holdings i.e., Lancashire Holdings and Mapfre SA go up and down completely randomly.

Pair Corralation between Lancashire Holdings and Mapfre SA

Assuming the 90 days horizon Lancashire Holdings is expected to generate 2.65 times less return on investment than Mapfre SA. But when comparing it to its historical volatility, Lancashire Holdings Limited is 1.28 times less risky than Mapfre SA. It trades about 0.08 of its potential returns per unit of risk. Mapfre SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  282.00  in Mapfre SA on April 24, 2025 and sell it today you would earn a total of  60.00  from holding Mapfre SA or generate 21.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Lancashire Holdings Limited  vs.  Mapfre SA

Lancashire Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lancashire Holdings Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lancashire Holdings may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Mapfre SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mapfre SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lancashire Holdings and Mapfre SA

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

The idea behind Lancashire Holdings Limited and Mapfre SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.