Correlation Between HCI and Global Indemnity
Can any of the company-specific risk be diversified away by investing in both HCI 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 HCI and Global Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCI Group and Global Indemnity PLC, you can compare the effects of market volatilities on HCI 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 HCI with a short position of Global Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCI and Global Indemnity.
Diversification Opportunities for HCI and Global Indemnity
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HCI and Global is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding HCI Group 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 HCI 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 HCI Group 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 HCI i.e., HCI and Global Indemnity go up and down completely randomly.
Pair Corralation between HCI and Global Indemnity
Considering the 90-day investment horizon HCI Group is expected to under-perform the Global Indemnity. In addition to that, HCI is 1.81 times more volatile than Global Indemnity PLC. It trades about 0.0 of its total potential returns per unit of risk. Global Indemnity PLC is currently generating about 0.23 per unit of volatility. If you would invest 3,400 in Global Indemnity PLC on August 29, 2024 and sell it today you would earn a total of 199.00 from holding Global Indemnity PLC or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCI Group vs. Global Indemnity PLC
Performance |
| Timeline |
| HCI Group |
| Global Indemnity PLC |
HCI and Global Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCI and Global Indemnity
The main advantage of trading using opposite HCI and Global Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCI 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.The idea behind HCI Group and Global Indemnity PLC 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.| Global Indemnity vs. Argo Group International | Global Indemnity vs. Donegal Group A | Global Indemnity vs. Selective Insurance Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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