Correlation Between Global Indemnity and First Business
Can any of the company-specific risk be diversified away by investing in both Global Indemnity and First Business 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 Global Indemnity and First Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Indemnity PLC and First Business Financial, you can compare the effects of market volatilities on Global Indemnity and First Business 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 Global Indemnity with a short position of First Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Indemnity and First Business.
Diversification Opportunities for Global Indemnity and First Business
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and First is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and First Business Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Business Financial and Global 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 Global Indemnity PLC are associated (or correlated) with First Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Business Financial has no effect on the direction of Global Indemnity i.e., Global Indemnity and First Business go up and down completely randomly.
Pair Corralation between Global Indemnity and First Business
Given the investment horizon of 90 days Global Indemnity PLC is expected to generate 49.91 times more return on investment than First Business. However, Global Indemnity is 49.91 times more volatile than First Business Financial. It trades about 0.11 of its potential returns per unit of risk. First Business Financial is currently generating about 0.1 per unit of risk. If you would invest 3,159 in Global Indemnity PLC on August 28, 2024 and sell it today you would earn a total of 355.00 from holding Global Indemnity PLC or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Indemnity PLC vs. First Business Financial
Performance |
| Timeline |
| Global Indemnity PLC |
| First Business Financial |
Global Indemnity and First Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Indemnity and First Business
The main advantage of trading using opposite Global Indemnity and First Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Indemnity position performs unexpectedly, First Business 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 First Business will offset losses from the drop in First Business' long position.| Global Indemnity vs. Fiverr International | Global Indemnity vs. Pinterest | Global Indemnity vs. Upstart Holdings | Global Indemnity vs. Fastly Inc |
| First Business vs. Fifth Third Bancorp | First Business vs. Zions Bancorporation | First Business vs. Huntington Bancshares Incorporated | First Business vs. Comerica |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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