Correlation Between REVO INSURANCE and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and Safety Insurance Group, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and Safety Insurance.
Diversification Opportunities for REVO INSURANCE and Safety Insurance
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between REVO and Safety is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and REVO 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and Safety Insurance go up and down completely randomly.
Pair Corralation between REVO INSURANCE and Safety Insurance
Assuming the 90 days horizon REVO INSURANCE is expected to generate 1.2 times less return on investment than Safety Insurance. But when comparing it to its historical volatility, REVO INSURANCE SPA is 1.16 times less risky than Safety Insurance. It trades about 0.18 of its potential returns per unit of risk. Safety Insurance Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,300 in Safety Insurance Group on August 24, 2024 and sell it today you would earn a total of 500.00 from holding Safety Insurance Group or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. Safety Insurance Group
Performance |
| Timeline |
| REVO INSURANCE SPA |
| Safety Insurance |
REVO INSURANCE and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and Safety Insurance
The main advantage of trading using opposite REVO INSURANCE and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. Lyxor 1 | REVO INSURANCE vs. Xtrackers LevDAX | REVO INSURANCE vs. Xtrackers ShortDAX | REVO INSURANCE vs. Superior Plus Corp |
| Safety Insurance vs. QBE Insurance Group | Safety Insurance vs. Insurance Australia Group | Safety Insurance vs. Superior Plus Corp | Safety Insurance vs. NMI Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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