Correlation Between Hallmark Financial and Global Indemnity

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

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

Diversification Opportunities for Hallmark Financial and Global Indemnity

-0.03

Correlation Coefficient

Hallmark Financial  Global Indemnity

Good diversification

The 3 months correlation between Hallmark and Global is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hallmark Financial Services 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 Hallmark Financial 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 Hallmark Financial Services 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 Hallmark Financial i.e., Hallmark Financial and Global Indemnity go up and down completely randomly.

Pair Corralation between Hallmark Financial and Global Indemnity

If you would invest  3,366  in Global Indemnity PLC on October 23, 2024 and sell it today you would earn a total of  110.00  from holding Global Indemnity PLC or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Hallmark Financial Services  vs.  Global Indemnity PLC

Hallmark Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hallmark Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Hallmark Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Global Indemnity PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Indemnity PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Global Indemnity is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hallmark Financial and Global Indemnity

The main advantage of trading using opposite Hallmark Financial and Global Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hallmark Financial 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 Hallmark Financial Services 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.