Correlation Between HCI and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both HCI 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 HCI and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCI Group and Selective Insurance Group, you can compare the effects of market volatilities on HCI 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 HCI with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCI and Selective Insurance.
Diversification Opportunities for HCI and Selective Insurance
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HCI and Selective is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding HCI Group and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and HCI 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 HCI Group 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 HCI i.e., HCI and Selective Insurance go up and down completely randomly.
Pair Corralation between HCI and Selective Insurance
Considering the 90-day investment horizon HCI Group is expected to generate 2.38 times more return on investment than Selective Insurance. However, HCI is 2.38 times more volatile than Selective Insurance Group. It trades about 0.18 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.1 per unit of risk. If you would invest 11,292 in HCI Group on September 1, 2024 and sell it today you would earn a total of 895.00 from holding HCI Group or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCI Group vs. Selective Insurance Group
Performance |
| Timeline |
| HCI Group |
| Selective Insurance |
HCI and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCI and Selective Insurance
The main advantage of trading using opposite HCI and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCI 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.| HCI vs. Universal Insurance Holdings | HCI vs. Kingstone Companies | HCI vs. Horace Mann Educators | HCI vs. Heritage Insurance Hldgs |
| Selective Insurance vs. Brighthouse Financial | Selective Insurance vs. First Citizens BancShares | Selective Insurance vs. Northern Trust | Selective Insurance vs. Dime Community Bancshares |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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