Correlation Between SBI Insurance and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both SBI Insurance 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 SBI Insurance and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Insurance Group and Selective Insurance Group, you can compare the effects of market volatilities on SBI Insurance 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 SBI Insurance with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and Selective Insurance.
Diversification Opportunities for SBI Insurance and Selective Insurance
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between SBI and Selective is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and SBI Insurance 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 SBI Insurance Group 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 SBI Insurance i.e., SBI Insurance and Selective Insurance go up and down completely randomly.
Pair Corralation between SBI Insurance and Selective Insurance
Assuming the 90 days trading horizon SBI Insurance Group is expected to generate 0.61 times more return on investment than Selective Insurance. However, SBI Insurance Group is 1.64 times less risky than Selective Insurance. It trades about 0.32 of its potential returns per unit of risk. Selective Insurance Group is currently generating about 0.02 per unit of risk. If you would invest 545.00 in SBI Insurance Group on August 26, 2024 and sell it today you would earn a total of 55.00 from holding SBI Insurance Group or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. Selective Insurance Group
Performance |
| Timeline |
| SBI Insurance Group |
| Selective Insurance |
SBI Insurance and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and Selective Insurance
The main advantage of trading using opposite SBI Insurance and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance 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.| SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc |
| Selective Insurance vs. Insurance Australia Group | Selective Insurance vs. Superior Plus Corp | Selective Insurance vs. NMI Holdings | Selective Insurance vs. Origin Agritech |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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