Correlation Between Hamilton Insurance and American Airlines

Can any of the company-specific risk be diversified away by investing in both Hamilton Insurance and American Airlines 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 Hamilton Insurance and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hamilton Insurance Group, and American Airlines Group, you can compare the effects of market volatilities on Hamilton Insurance and American Airlines 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 Hamilton Insurance with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Insurance and American Airlines.

Diversification Opportunities for Hamilton Insurance and American Airlines

-0.32

Correlation Coefficient

Hamilton Insurance  American Airlines

Very good diversification

The 3 months correlation between Hamilton and American is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Insurance Group, and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Hamilton Insurance 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 Hamilton Insurance Group, are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Hamilton Insurance i.e., Hamilton Insurance and American Airlines go up and down completely randomly.

Pair Corralation between Hamilton Insurance and American Airlines

Allowing for the 90-day total investment horizon Hamilton Insurance is expected to generate 1.52 times less return on investment than American Airlines. But when comparing it to its historical volatility, Hamilton Insurance Group, is 1.43 times less risky than American Airlines. It trades about 0.27 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,299  in American Airlines Group on September 4, 2024 and sell it today you would earn a total of  162.00  from holding American Airlines Group or generate 12.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hamilton Insurance Group,  vs.  American Airlines Group

Hamilton Insurance Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hamilton Insurance Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Hamilton Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

American Airlines

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hamilton Insurance and American Airlines

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

The idea behind Hamilton Insurance Group, and American Airlines Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.