Correlation Between NYSE Composite and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Safety Insurance Group, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Safety Insurance.
Diversification Opportunities for NYSE Composite and Safety Insurance
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Safety is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Safety Insurance go up and down completely randomly.
Pair Corralation between NYSE Composite and Safety Insurance
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.09 times less return on investment than Safety Insurance. But when comparing it to its historical volatility, NYSE Composite is 3.96 times less risky than Safety Insurance. It trades about 0.29 of its potential returns per unit of risk. Safety Insurance Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 7,881 in Safety Insurance Group on August 31, 2024 and sell it today you would earn a total of 641.00 from holding Safety Insurance Group or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Safety Insurance Group
Performance |
| Timeline |
NYSE Composite and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Safety Insurance Group
Pair trading matchups for Safety Insurance
Pair Trading with NYSE Composite and Safety Insurance
The main advantage of trading using opposite NYSE Composite and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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