Correlation Between TELE2 B and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both TELE2 B 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 TELE2 B and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TELE2 B and Selective Insurance Group, you can compare the effects of market volatilities on TELE2 B 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 TELE2 B with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELE2 B and Selective Insurance.
Diversification Opportunities for TELE2 B and Selective Insurance
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TELE2 and Selective is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TELE2 B and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and TELE2 B 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 TELE2 B 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 TELE2 B i.e., TELE2 B and Selective Insurance go up and down completely randomly.
Pair Corralation between TELE2 B and Selective Insurance
Assuming the 90 days trading horizon TELE2 B is expected to under-perform the Selective Insurance. But the stock apears to be less risky and, when comparing its historical volatility, TELE2 B is 1.21 times less risky than Selective Insurance. The stock trades about -0.17 of its potential returns per unit of risk. The Selective Insurance Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 8,850 in Selective Insurance Group on September 23, 2024 and sell it today you would lose (50.00) from holding Selective Insurance Group or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TELE2 B vs. Selective Insurance Group
Performance |
| Timeline |
| TELE2 B |
| Selective Insurance |
TELE2 B and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TELE2 B and Selective Insurance
The main advantage of trading using opposite TELE2 B and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TELE2 B 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.| TELE2 B vs. Altair Engineering | TELE2 B vs. SOGECLAIR SA INH | TELE2 B vs. SYSTEMAIR AB | TELE2 B vs. Air New Zealand |
| Selective Insurance vs. The Progressive | Selective Insurance vs. The Allstate | Selective Insurance vs. PICC Property and | Selective Insurance vs. Cincinnati Financial |
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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