Correlation Between Gold Road and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Gold Road 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 Gold Road and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Selective Insurance Group, you can compare the effects of market volatilities on Gold Road 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 Gold Road with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Selective Insurance.
Diversification Opportunities for Gold Road and Selective Insurance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Selective is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Gold Road 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 Gold Road Resources 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 Gold Road i.e., Gold Road and Selective Insurance go up and down completely randomly.
Pair Corralation between Gold Road and Selective Insurance
Assuming the 90 days horizon Gold Road Resources is expected to generate 1.22 times more return on investment than Selective Insurance. However, Gold Road is 1.22 times more volatile than Selective Insurance Group. It trades about 0.08 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 96.00 in Gold Road Resources on September 3, 2024 and sell it today you would earn a total of 22.00 from holding Gold Road Resources or generate 22.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Selective Insurance Group
Performance |
| Timeline |
| Gold Road Resources |
| Selective Insurance |
Gold Road and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Selective Insurance
The main advantage of trading using opposite Gold Road and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road 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.| Gold Road vs. ZIJIN MINH UNSPADR20 | Gold Road vs. Barrick Gold | Gold Road vs. Superior Plus Corp | Gold Road vs. NMI Holdings |
| Selective Insurance vs. The Progressive | Selective Insurance vs. The Allstate | Selective Insurance vs. PICC Property and | Selective Insurance vs. Fairfax Financial Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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