Correlation Between Everest and Hamilton Insurance

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

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

Diversification Opportunities for Everest and Hamilton Insurance

0.42

Correlation Coefficient

Everest  Hamilton Insurance

Very weak diversification

The 3 months correlation between Everest and Hamilton is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Everest Group 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 Everest 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 Everest Group 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 Everest i.e., Everest and Hamilton Insurance go up and down completely randomly.

Pair Corralation between Everest and Hamilton Insurance

Allowing for the 90-day total investment horizon Everest is expected to generate 4.81 times less return on investment than Hamilton Insurance. But when comparing it to its historical volatility, Everest Group is 1.3 times less risky than Hamilton Insurance. It trades about 0.04 of its potential returns per unit of risk. Hamilton Insurance Group, is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,868  in Hamilton Insurance Group, on December 27, 2024 and sell it today you would earn a total of  290.00  from holding Hamilton Insurance Group, or generate 15.52% return on investment over 90 days.

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

Everest Group  vs.  Hamilton Insurance Group,

Everest Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hamilton Insurance Group,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Insurance Group, are ranked lower than 11 (%) 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 Everest and Hamilton Insurance

The main advantage of trading using opposite Everest and Hamilton Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everest 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 Everest Group 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.