Correlation Between Admiral Group and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both Admiral Group and Safety 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 Admiral Group and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group plc and Safety Insurance Group, you can compare the effects of market volatilities on Admiral Group and Safety 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 Admiral Group with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and Safety Insurance.
Diversification Opportunities for Admiral Group and Safety Insurance
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Admiral and Safety is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group plc and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and Admiral Group 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 Admiral Group plc are associated (or correlated) with Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of Admiral Group i.e., Admiral Group and Safety Insurance go up and down completely randomly.
Pair Corralation between Admiral Group and Safety Insurance
Assuming the 90 days horizon Admiral Group plc is expected to under-perform the Safety Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Admiral Group plc is 1.27 times less risky than Safety Insurance. The stock trades about -0.12 of its potential returns per unit of risk. The Safety Insurance Group is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 7,200 in Safety Insurance Group on August 31, 2024 and sell it today you would earn a total of 950.00 from holding Safety Insurance Group or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Admiral Group plc vs. Safety Insurance Group
Performance |
| Timeline |
| Admiral Group plc |
| Safety Insurance |
Admiral Group and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Admiral Group and Safety Insurance
The main advantage of trading using opposite Admiral Group and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group position performs unexpectedly, Safety 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 Safety Insurance will offset losses from the drop in Safety Insurance's long position.| Admiral Group vs. The Progressive | Admiral Group vs. Fairfax Financial Holdings | Admiral Group vs. Insurance Australia Group |
| Safety Insurance vs. Chuangs China Investments | Safety Insurance vs. UNIVERSAL MUSIC GROUP | Safety Insurance vs. Gladstone Investment | Safety Insurance vs. BURLINGTON STORES |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |