Correlation Between Houlihan Lokey and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Houlihan Lokey 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 Houlihan Lokey and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Houlihan Lokey and Selective Insurance Group, you can compare the effects of market volatilities on Houlihan Lokey 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 Houlihan Lokey with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Houlihan Lokey and Selective Insurance.
Diversification Opportunities for Houlihan Lokey and Selective Insurance
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Houlihan and Selective is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Houlihan Lokey 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 Houlihan Lokey 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 Houlihan Lokey i.e., Houlihan Lokey and Selective Insurance go up and down completely randomly.
Pair Corralation between Houlihan Lokey and Selective Insurance
Considering the 90-day investment horizon Houlihan Lokey is expected to generate 1.37 times more return on investment than Selective Insurance. However, Houlihan Lokey is 1.37 times more volatile than Selective Insurance Group. It trades about 0.24 of its potential returns per unit of risk. Selective Insurance Group is currently generating about 0.27 per unit of risk. If you would invest 16,465 in Houlihan Lokey on August 31, 2024 and sell it today you would earn a total of 2,278 from holding Houlihan Lokey or generate 13.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Houlihan Lokey vs. Selective Insurance Group
Performance |
| Timeline |
| Houlihan Lokey |
| Selective Insurance |
Houlihan Lokey and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Houlihan Lokey and Selective Insurance
The main advantage of trading using opposite Houlihan Lokey and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Houlihan Lokey 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.| Houlihan Lokey vs. Lazard | Houlihan Lokey vs. PJT Partners | Houlihan Lokey vs. Moelis Co | Houlihan Lokey vs. Piper Sandler Companies |
| Selective Insurance vs. Progressive Corp | Selective Insurance vs. Chubb | Selective Insurance vs. The Allstate | Selective Insurance vs. Kemper |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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