Correlation Between Superior Plus and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Selective 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 Superior Plus and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Selective Insurance Group, you can compare the effects of market volatilities on Superior Plus and Selective 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 Superior Plus with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Selective Insurance.
Diversification Opportunities for Superior Plus and Selective Insurance
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and Selective is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Superior Plus i.e., Superior Plus and Selective Insurance go up and down completely randomly.
Pair Corralation between Superior Plus and Selective Insurance
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Selective Insurance. In addition to that, Superior Plus is 1.25 times more volatile than Selective Insurance Group. It trades about -0.02 of its total potential returns per unit of risk. Selective Insurance Group is currently generating about 0.01 per unit of volatility. If you would invest 8,544 in Selective Insurance Group on August 28, 2024 and sell it today you would earn a total of 306.00 from holding Selective Insurance Group or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Selective Insurance Group
Performance |
| Timeline |
| Superior Plus Corp |
| Selective Insurance |
Superior Plus and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Selective Insurance
The main advantage of trading using opposite Superior Plus and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Selective 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 Selective Insurance will offset losses from the drop in Selective Insurance's long position.| Superior Plus vs. CDL INVESTMENT | Superior Plus vs. ECHO INVESTMENT ZY | Superior Plus vs. SEI INVESTMENTS | Superior Plus vs. Gruppo Mutuionline SpA |
| Selective Insurance vs. Haier Smart Home | Selective Insurance vs. Strategic Education | Selective Insurance vs. American Public Education | Selective Insurance vs. Japan Tobacco |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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