Correlation Between Spirent Communications and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Selective Insurance Group, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Selective Insurance.
Diversification Opportunities for Spirent Communications and Selective Insurance
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Spirent and Selective is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Selective Insurance go up and down completely randomly.
Pair Corralation between Spirent Communications and Selective Insurance
Assuming the 90 days horizon Spirent Communications plc is expected to generate 1.17 times more return on investment than Selective Insurance. However, Spirent Communications is 1.17 times more volatile than Selective Insurance Group. It trades about -0.01 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.04 per unit of risk. If you would invest 206.00 in Spirent Communications plc on October 26, 2024 and sell it today you would lose (6.00) from holding Spirent Communications plc or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Selective Insurance Group
Performance |
| Timeline |
| Spirent Communications |
| Selective Insurance |
Spirent Communications and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Selective Insurance
The main advantage of trading using opposite Spirent Communications and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. United Utilities Group | Spirent Communications vs. SBM OFFSHORE | Spirent Communications vs. Algonquin Power Utilities | Spirent Communications vs. UNIQA INSURANCE GR |
| Selective Insurance vs. Spirent Communications plc | Selective Insurance vs. Sumitomo Mitsui Construction | Selective Insurance vs. AGRICULTBK HADR25 YC | Selective Insurance vs. ALEFARM BREWING DK 05 |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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