Correlation Between Global Indemnity and Root
Can any of the company-specific risk be diversified away by investing in both Global Indemnity and Root 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 Global Indemnity and Root into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Indemnity PLC and Root Inc, you can compare the effects of market volatilities on Global Indemnity and Root 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 Global Indemnity with a short position of Root. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Indemnity and Root.
Diversification Opportunities for Global Indemnity and Root
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Root is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and Root Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Root Inc and Global Indemnity 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 Global Indemnity PLC are associated (or correlated) with Root. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Root Inc has no effect on the direction of Global Indemnity i.e., Global Indemnity and Root go up and down completely randomly.
Pair Corralation between Global Indemnity and Root
Given the investment horizon of 90 days Global Indemnity PLC is expected to under-perform the Root. But the stock apears to be less risky and, when comparing its historical volatility, Global Indemnity PLC is 2.99 times less risky than Root. The stock trades about -0.09 of its potential returns per unit of risk. The Root Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7,343 in Root Inc on December 3, 2024 and sell it today you would earn a total of 6,174 from holding Root Inc or generate 84.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.0% |
Values | Daily Returns |
Global Indemnity PLC vs. Root Inc
Performance |
Timeline |
Global Indemnity PLC |
Root Inc |
Global Indemnity and Root Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Indemnity and Root
The main advantage of trading using opposite Global Indemnity and Root positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Indemnity position performs unexpectedly, Root 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 Root will offset losses from the drop in Root's long position.Global Indemnity vs. Selective Insurance Group | Global Indemnity vs. Kemper | Global Indemnity vs. Donegal Group B | Global Indemnity vs. Argo Group International |
Root vs. Selective Insurance Group | Root vs. Donegal Group B | Root vs. Horace Mann Educators | Root vs. Global Indemnity PLC |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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