Correlation Between Hamilton Insurance and American Airlines

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

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

Diversification Opportunities for Hamilton Insurance and American Airlines

0.15

Correlation Coefficient

Hamilton Insurance  American Airlines

Average diversification

The 3 months correlation between Hamilton and American is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Insurance Group, and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Hamilton Insurance 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 Hamilton Insurance Group, are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Hamilton Insurance i.e., Hamilton Insurance and American Airlines go up and down completely randomly.

Pair Corralation between Hamilton Insurance and American Airlines

Allowing for the 90-day total investment horizon Hamilton Insurance Group, is expected to generate 0.82 times more return on investment than American Airlines. However, Hamilton Insurance Group, is 1.22 times less risky than American Airlines. It trades about 0.05 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.01 per unit of risk. If you would invest  1,500  in Hamilton Insurance Group, on December 2, 2024 and sell it today you would earn a total of  456.00  from holding Hamilton Insurance Group, or generate 30.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.06%
Values	Daily Returns

Hamilton Insurance Group,  vs.  American Airlines Group

Hamilton Insurance Group,

Risk-Adjusted Performance

Insignificant

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

American Airlines

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hamilton Insurance and American Airlines

The main advantage of trading using opposite Hamilton Insurance and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Insurance position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.

The idea behind Hamilton Insurance Group, and American Airlines 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .