Correlation Between Kemper and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both Kemper 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 Kemper and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kemper and Safety Insurance Group, you can compare the effects of market volatilities on Kemper 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 Kemper with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kemper and Safety Insurance.
Diversification Opportunities for Kemper and Safety Insurance
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kemper and Safety is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kemper and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and Kemper 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 Kemper 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 Kemper i.e., Kemper and Safety Insurance go up and down completely randomly.
Pair Corralation between Kemper and Safety Insurance
Given the investment horizon of 90 days Kemper is expected to generate 1.12 times more return on investment than Safety Insurance. However, Kemper is 1.12 times more volatile than Safety Insurance Group. It trades about 0.06 of its potential returns per unit of risk. Safety Insurance Group is currently generating about 0.03 per unit of risk. If you would invest 5,400 in Kemper on November 9, 2024 and sell it today you would earn a total of 1,550 from holding Kemper or generate 28.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kemper vs. Safety Insurance Group
Performance |
| Timeline |
| Kemper |
| Safety Insurance |
Kemper and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kemper and Safety Insurance
The main advantage of trading using opposite Kemper and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemper 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.| Kemper vs. Selective Insurance Group | Kemper vs. Donegal Group B | Kemper vs. Argo Group International | Kemper vs. Global Indemnity PLC |
| Safety Insurance vs. Selective Insurance Group | Safety Insurance vs. Kemper | Safety Insurance vs. Donegal Group B | Safety Insurance vs. Argo Group International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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