Correlation Between Fair Isaac and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Fair Isaac 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 Fair Isaac and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Isaac Corp and Selective Insurance Group, you can compare the effects of market volatilities on Fair Isaac 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 Fair Isaac with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and Selective Insurance.
Diversification Opportunities for Fair Isaac and Selective Insurance
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fair and Selective is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac 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 Fair Isaac 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 Fair Isaac 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 Fair Isaac i.e., Fair Isaac and Selective Insurance go up and down completely randomly.
Pair Corralation between Fair Isaac and Selective Insurance
Assuming the 90 days trading horizon Fair Isaac Corp is expected to generate 1.21 times more return on investment than Selective Insurance. However, Fair Isaac is 1.21 times more volatile than Selective Insurance Group. It trades about 0.34 of its potential returns per unit of risk. Selective Insurance Group is currently generating about 0.18 per unit of risk. If you would invest 186,950 in Fair Isaac Corp on August 29, 2024 and sell it today you would earn a total of 39,650 from holding Fair Isaac Corp or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fair Isaac Corp vs. Selective Insurance Group
Performance |
| Timeline |
| Fair Isaac Corp |
| Selective Insurance |
Fair Isaac and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Isaac and Selective Insurance
The main advantage of trading using opposite Fair Isaac and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Isaac 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.The idea behind Fair Isaac Corp and Selective Insurance Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Selective Insurance vs. PICC Property and | Selective Insurance vs. QBE Insurance Group | Selective Insurance vs. Superior Plus Corp | Selective Insurance vs. SIVERS SEMICONDUCTORS AB |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |