Correlation Between Global Indemnity and Loews Corp

Can any of the company-specific risk be diversified away by investing in both Global Indemnity and Loews Corp 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 Loews Corp 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 Loews Corp, you can compare the effects of market volatilities on Global Indemnity and Loews Corp 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 Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Indemnity and Loews Corp.

Diversification Opportunities for Global Indemnity and Loews Corp

0.21

Correlation Coefficient

Global Indemnity  Loews Corp

Modest diversification

The 3 months correlation between Global and Loews is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Global Indemnity i.e., Global Indemnity and Loews Corp go up and down completely randomly.

Pair Corralation between Global Indemnity and Loews Corp

Given the investment horizon of 90 days Global Indemnity is expected to generate 1.08 times less return on investment than Loews Corp. But when comparing it to its historical volatility, Global Indemnity PLC is 1.27 times less risky than Loews Corp. It trades about 0.19 of its potential returns per unit of risk. Loews Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  7,905  in Loews Corp on August 30, 2024 and sell it today you would earn a total of  800.00  from holding Loews Corp or generate 10.12% 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.  Loews Corp

Global Indemnity PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Indemnity PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Global Indemnity demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Loews Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Loews Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Global Indemnity and Loews Corp

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

The idea behind Global Indemnity PLC and Loews Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.