Correlation Between Definitive Healthcare and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare 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 Definitive Healthcare and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definitive Healthcare Corp and Selective Insurance Group, you can compare the effects of market volatilities on Definitive Healthcare 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 Definitive Healthcare with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and Selective Insurance.
Diversification Opportunities for Definitive Healthcare and Selective Insurance
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Definitive and Selective is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare 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 Definitive Healthcare 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 Definitive Healthcare 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 Definitive Healthcare i.e., Definitive Healthcare and Selective Insurance go up and down completely randomly.
Pair Corralation between Definitive Healthcare and Selective Insurance
Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to under-perform the Selective Insurance. In addition to that, Definitive Healthcare is 6.05 times more volatile than Selective Insurance Group. It trades about -0.24 of its total potential returns per unit of risk. Selective Insurance Group is currently generating about 0.28 per unit of volatility. If you would invest 8,302 in Selective Insurance Group on December 27, 2024 and sell it today you would earn a total of 716.00 from holding Selective Insurance Group or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definitive Healthcare Corp vs. Selective Insurance Group
Performance |
| Timeline |
| Definitive Healthcare |
| Selective Insurance |
Definitive Healthcare and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definitive Healthcare and Selective Insurance
The main advantage of trading using opposite Definitive Healthcare and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare 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.| Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Evolent Health | Definitive Healthcare vs. Simulations Plus | Definitive Healthcare vs. Privia Health Group |
| Selective Insurance vs. Kemper | Selective Insurance vs. Donegal Group B | Selective Insurance vs. Argo Group International | Selective Insurance vs. Global Indemnity PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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