Correlation Between Loews Corp and Hamilton Insurance

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Can any of the company-specific risk be diversified away by investing in both Loews Corp 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 Loews Corp and Hamilton Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loews Corp and Hamilton Insurance Group,, you can compare the effects of market volatilities on Loews Corp 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 Loews Corp with a short position of Hamilton Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Hamilton Insurance.

Diversification Opportunities for Loews Corp and Hamilton Insurance

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Loews and Hamilton is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp 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 Loews Corp 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 Loews Corp 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 Loews Corp i.e., Loews Corp and Hamilton Insurance go up and down completely randomly.

Pair Corralation between Loews Corp and Hamilton Insurance

Taking into account the 90-day investment horizon Loews Corp is expected to generate 1.28 times less return on investment than Hamilton Insurance. But when comparing it to its historical volatility, Loews Corp is 1.91 times less risky than Hamilton Insurance. It trades about 0.07 of its potential returns per unit of risk. Hamilton Insurance Group, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,500  in Hamilton Insurance Group, on October 11, 2024 and sell it today you would earn a total of  386.00  from holding Hamilton Insurance Group, or generate 25.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy58.99%
ValuesDaily Returns

Loews Corp  vs.  Hamilton Insurance Group,

 Performance 
       Timeline  
Loews Corp 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
Hamilton Insurance Group, 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Insurance Group, are ranked lower than 2 (%) 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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Loews Corp and Hamilton Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Loews Corp and Hamilton Insurance

The main advantage of trading using opposite Loews Corp and Hamilton Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp 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 Loews Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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