Correlation Between First Acceptance and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both First Acceptance 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 First Acceptance and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Acceptance Corp and Selective Insurance Group, you can compare the effects of market volatilities on First Acceptance 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 First Acceptance with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Acceptance and Selective Insurance.
Diversification Opportunities for First Acceptance and Selective Insurance
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Selective is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Acceptance 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 First Acceptance 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 First Acceptance 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 First Acceptance i.e., First Acceptance and Selective Insurance go up and down completely randomly.
Pair Corralation between First Acceptance and Selective Insurance
Given the investment horizon of 90 days First Acceptance Corp is expected to under-perform the Selective Insurance. In addition to that, First Acceptance is 3.61 times more volatile than Selective Insurance Group. It trades about 0.0 of its total potential returns per unit of risk. Selective Insurance Group is currently generating about 0.02 per unit of volatility. If you would invest 9,012 in Selective Insurance Group on August 24, 2024 and sell it today you would earn a total of 770.00 from holding Selective Insurance Group or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 9.27% |
| Values | Daily Returns |
First Acceptance Corp vs. Selective Insurance Group
Performance |
| Timeline |
| First Acceptance Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Selective Insurance |
First Acceptance and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Acceptance and Selective Insurance
The main advantage of trading using opposite First Acceptance and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Acceptance 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.| First Acceptance vs. Essent Group | First Acceptance vs. James River Group | First Acceptance vs. MGIC Investment Corp | First Acceptance vs. Employers Holdings |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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