Correlation Between Gap and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Gap 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 Gap and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap and Selective Insurance Group, you can compare the effects of market volatilities on Gap 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 Gap with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap and Selective Insurance.
Diversification Opportunities for Gap and Selective Insurance
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gap and Selective is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Gap and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Gap 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 The Gap 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 Gap i.e., Gap and Selective Insurance go up and down completely randomly.
Pair Corralation between Gap and Selective Insurance
Assuming the 90 days trading horizon The Gap is expected to generate 1.77 times more return on investment than Selective Insurance. However, Gap is 1.77 times more volatile than Selective Insurance Group. It trades about 0.09 of its potential returns per unit of risk. Selective Insurance Group is currently generating about 0.12 per unit of risk. If you would invest 1,980 in The Gap on September 2, 2024 and sell it today you would earn a total of 310.00 from holding The Gap or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.48% |
| Values | Daily Returns |
The Gap vs. Selective Insurance Group
Performance |
| Timeline |
| Gap |
| Selective Insurance |
Gap and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap and Selective Insurance
The main advantage of trading using opposite Gap and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap 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.| Gap vs. Sims Metal Management | Gap vs. Siamgas And Petrochemicals | Gap vs. CEOTRONICS | Gap vs. Media and Games |
| Selective Insurance vs. Hemisphere Energy Corp | Selective Insurance vs. TOREX SEMICONDUCTOR LTD | Selective Insurance vs. SAFETY MEDICAL PROD | Selective Insurance vs. CompuGroup Medical SE |
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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