Correlation Between Bechtle AG and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both Bechtle AG and Safety 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 Bechtle AG and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bechtle AG and Safety Insurance Group, you can compare the effects of market volatilities on Bechtle AG and Safety 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 Bechtle AG with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bechtle AG and Safety Insurance.
Diversification Opportunities for Bechtle AG and Safety Insurance
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bechtle and Safety is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bechtle AG and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and Bechtle AG 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 Bechtle AG are associated (or correlated) with Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of Bechtle AG i.e., Bechtle AG and Safety Insurance go up and down completely randomly.
Pair Corralation between Bechtle AG and Safety Insurance
Assuming the 90 days trading horizon Bechtle AG is expected to under-perform the Safety Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Bechtle AG is 1.13 times less risky than Safety Insurance. The stock trades about -0.16 of its potential returns per unit of risk. The Safety Insurance Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,009 in Safety Insurance Group on September 12, 2024 and sell it today you would earn a total of 91.00 from holding Safety Insurance Group or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bechtle AG vs. Safety Insurance Group
Performance |
| Timeline |
| Bechtle AG |
| Safety Insurance |
Bechtle AG and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bechtle AG and Safety Insurance
The main advantage of trading using opposite Bechtle AG and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bechtle AG position performs unexpectedly, Safety 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 Safety Insurance will offset losses from the drop in Safety Insurance's long position.| Bechtle AG vs. GOODYEAR T RUBBER | Bechtle AG vs. Verizon Communications | Bechtle AG vs. SANOK RUBBER ZY | Bechtle AG vs. VULCAN MATERIALS |
| Safety Insurance vs. QBE Insurance Group | Safety Insurance vs. Insurance Australia Group | Safety Insurance vs. Superior Plus Corp | Safety Insurance vs. SIVERS SEMICONDUCTORS AB |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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