Correlation Between Global Indemnity and Stewart Information
Can any of the company-specific risk be diversified away by investing in both Global Indemnity and Stewart Information 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 Stewart Information 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 Stewart Information Services, you can compare the effects of market volatilities on Global Indemnity and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Indemnity and Stewart Information.
Diversification Opportunities for Global Indemnity and Stewart Information
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Stewart is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Global Indemnity i.e., Global Indemnity and Stewart Information go up and down completely randomly.
Pair Corralation between Global Indemnity and Stewart Information
Given the investment horizon of 90 days Global Indemnity PLC is expected to generate 1.03 times more return on investment than Stewart Information. However, Global Indemnity is 1.03 times more volatile than Stewart Information Services. It trades about 0.05 of its potential returns per unit of risk. Stewart Information Services is currently generating about 0.05 per unit of risk. If you would invest 2,873 in Global Indemnity PLC on December 16, 2024 and sell it today you would earn a total of 683.00 from holding Global Indemnity PLC or generate 23.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.92% |
| Values | Daily Returns |
Global Indemnity PLC vs. Stewart Information Services
Performance |
| Timeline |
| Global Indemnity PLC |
| Stewart Information |
Global Indemnity and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Indemnity and Stewart Information
The main advantage of trading using opposite Global Indemnity and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Indemnity position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information's long position.| Global Indemnity vs. Selective Insurance Group | ||
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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