Correlation Between Fidelis Insurance and American International

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

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

Diversification Opportunities for Fidelis Insurance and American International

0.93

Correlation Coefficient

Fidelis Insurance  American International

Almost no diversification

The 3 months correlation between Fidelis and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fidelis Insurance Holdings and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International and Fidelis 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 Fidelis Insurance Holdings are associated (or correlated) with American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of Fidelis Insurance i.e., Fidelis Insurance and American International go up and down completely randomly.

Pair Corralation between Fidelis Insurance and American International

Given the investment horizon of 90 days Fidelis Insurance Holdings is expected to generate 1.39 times more return on investment than American International. However, Fidelis Insurance is 1.39 times more volatile than American International Group. It trades about 0.12 of its potential returns per unit of risk. American International Group is currently generating about -0.09 per unit of risk. If you would invest  1,925  in Fidelis Insurance Holdings on January 31, 2024 and sell it today you would earn a total of  78.00  from holding Fidelis Insurance Holdings or generate 4.05% return on investment over 90 days.

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

Fidelis Insurance Holdings  vs.  American International Group

Fidelis Insurance

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelis Insurance Holdings are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent technical indicators, Fidelis Insurance disclosed solid returns over the last few months and may actually be approaching a breakup point.

American International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American International Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, American International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Fidelis Insurance and American International

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

The idea behind Fidelis Insurance Holdings and American International 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.

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.