Correlation Between United States and Hamilton Insurance

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

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

Diversification Opportunities for United States and Hamilton Insurance

-0.08

Correlation Coefficient

United States  Hamilton Insurance

Good diversification

The 3 months correlation between United and Hamilton is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Hamilton Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Insurance and United States 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 United States Steel 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 has no effect on the direction of United States i.e., United States and Hamilton Insurance go up and down completely randomly.

Pair Corralation between United States and Hamilton Insurance

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the Hamilton Insurance. But the stock apears to be less risky and, when comparing its historical volatility, United States Steel is 1.29 times less risky than Hamilton Insurance. The stock trades about -0.11 of its potential returns per unit of risk. The Hamilton Insurance Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,321  in Hamilton Insurance Group on February 20, 2024 and sell it today you would earn a total of  325.00  from holding Hamilton Insurance Group or generate 24.6% return on investment over 90 days.

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

United States Steel  vs.  Hamilton Insurance Group

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Hamilton Insurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Insurance Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Hamilton Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United States and Hamilton Insurance

The main advantage of trading using opposite United States and Hamilton Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.