Correlation Between Erie Indemnity and Global Indemnity
Can any of the company-specific risk be diversified away by investing in both Erie Indemnity and Global Indemnity 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 Global Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erie Indemnity and Global Indemnity PLC, you can compare the effects of market volatilities on Erie Indemnity and Global Indemnity 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 Global Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erie Indemnity and Global Indemnity.
Diversification Opportunities for Erie Indemnity and Global Indemnity
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erie and Global is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Erie Indemnity and Global Indemnity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Indemnity PLC 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 Global Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Indemnity PLC has no effect on the direction of Erie Indemnity i.e., Erie Indemnity and Global Indemnity go up and down completely randomly.
Pair Corralation between Erie Indemnity and Global Indemnity
Given the investment horizon of 90 days Erie Indemnity is expected to under-perform the Global Indemnity. In addition to that, Erie Indemnity is 2.26 times more volatile than Global Indemnity PLC. It trades about -0.08 of its total potential returns per unit of risk. Global Indemnity PLC is currently generating about 0.16 per unit of volatility. If you would invest 3,400 in Global Indemnity PLC on August 27, 2024 and sell it today you would earn a total of 114.00 from holding Global Indemnity PLC or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erie Indemnity vs. Global Indemnity PLC
Performance |
| Timeline |
| Erie Indemnity |
| Global Indemnity PLC |
Erie Indemnity and Global Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erie Indemnity and Global Indemnity
The main advantage of trading using opposite Erie Indemnity and Global Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erie Indemnity position performs unexpectedly, Global Indemnity 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 Global Indemnity will offset losses from the drop in Global Indemnity's long position.| Erie Indemnity vs. CorVel Corp | Erie Indemnity vs. eHealth | Erie Indemnity vs. Aquagold International | Erie Indemnity vs. Morningstar Unconstrained Allocation |
| Global Indemnity vs. Fiverr International | Global Indemnity vs. Pinterest | Global Indemnity vs. Upstart Holdings | Global Indemnity vs. Fastly Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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