Correlation Between Horace Mann and Global Indemnity

Can any of the company-specific risk be diversified away by investing in both Horace Mann 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 Horace Mann and Global Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Horace Mann Educators and Global Indemnity PLC, you can compare the effects of market volatilities on Horace Mann 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 Horace Mann with a short position of Global Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horace Mann and Global Indemnity.

Diversification Opportunities for Horace Mann and Global Indemnity

0.05

Correlation Coefficient

Horace Mann  Global Indemnity

Significant diversification

The 3 months correlation between Horace and Global is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Horace Mann Educators 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 Horace Mann 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 Horace Mann Educators 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 Horace Mann i.e., Horace Mann and Global Indemnity go up and down completely randomly.

Pair Corralation between Horace Mann and Global Indemnity

Considering the 90-day investment horizon Horace Mann Educators is expected to under-perform the Global Indemnity. But the stock apears to be less risky and, when comparing its historical volatility, Horace Mann Educators is 1.09 times less risky than Global Indemnity. The stock trades about -0.03 of its potential returns per unit of risk. The Global Indemnity PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,769  in Global Indemnity PLC on February 20, 2024 and sell it today you would earn a total of  407.00  from holding Global Indemnity PLC or generate 14.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Horace Mann Educators  vs.  Global Indemnity PLC

Horace Mann Educators

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horace Mann Educators has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Horace Mann is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global Indemnity PLC

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Indemnity PLC are ranked lower than 10 (%) 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.

Pair Trading with Horace Mann and Global Indemnity

The main advantage of trading using opposite Horace Mann and Global Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horace Mann 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 Horace Mann Educators 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.