Correlation Between Reinsurance Group and Hamilton Insurance

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

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

Diversification Opportunities for Reinsurance Group and Hamilton Insurance

0.19

Correlation Coefficient

Reinsurance Group  Hamilton Insurance

Average diversification

The 3 months correlation between Reinsurance and Hamilton is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Hamilton Insurance Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Insurance Group, and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with Hamilton Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Insurance Group, has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Hamilton Insurance go up and down completely randomly.

Pair Corralation between Reinsurance Group and Hamilton Insurance

Considering the 90-day investment horizon Reinsurance Group of is expected to under-perform the Hamilton Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Reinsurance Group of is 1.13 times less risky than Hamilton Insurance. The stock trades about -0.4 of its potential returns per unit of risk. The Hamilton Insurance Group, is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,900  in Hamilton Insurance Group, on September 23, 2024 and sell it today you would earn a total of  17.00  from holding Hamilton Insurance Group, or generate 0.89% return on investment over 90 days.

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

Reinsurance Group of  vs.  Hamilton Insurance Group,

Reinsurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reinsurance Group of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Reinsurance Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hamilton Insurance Group,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Insurance Group, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Hamilton Insurance is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Reinsurance Group and Hamilton Insurance

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

The idea behind Reinsurance Group of and Hamilton Insurance 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.