Correlation Between OPEN HOUSE and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both OPEN HOUSE 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 OPEN HOUSE and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPEN HOUSE GROUP and Selective Insurance Group, you can compare the effects of market volatilities on OPEN HOUSE 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 OPEN HOUSE with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPEN HOUSE and Selective Insurance.
Diversification Opportunities for OPEN HOUSE and Selective Insurance
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OPEN and Selective is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding OPEN HOUSE 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 OPEN HOUSE 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 OPEN HOUSE 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 OPEN HOUSE i.e., OPEN HOUSE and Selective Insurance go up and down completely randomly.
Pair Corralation between OPEN HOUSE and Selective Insurance
Assuming the 90 days horizon OPEN HOUSE GROUP is expected to under-perform the Selective Insurance. But the stock apears to be less risky and, when comparing its historical volatility, OPEN HOUSE GROUP is 1.17 times less risky than Selective Insurance. The stock trades about -0.09 of its potential returns per unit of risk. The Selective Insurance Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,650 in Selective Insurance Group on October 20, 2024 and sell it today you would earn a total of 100.00 from holding Selective Insurance Group or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OPEN HOUSE GROUP vs. Selective Insurance Group
Performance |
| Timeline |
| OPEN HOUSE GROUP |
| Selective Insurance |
OPEN HOUSE and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OPEN HOUSE and Selective Insurance
The main advantage of trading using opposite OPEN HOUSE and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPEN HOUSE 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.| OPEN HOUSE vs. SEALED AIR | OPEN HOUSE vs. Westinghouse Air Brake | OPEN HOUSE vs. Firan Technology Group | OPEN HOUSE vs. FAIR ISAAC |
| Selective Insurance vs. GigaMedia | Selective Insurance vs. Hochschild Mining plc | Selective Insurance vs. Teradata Corp | Selective Insurance vs. CONTAGIOUS GAMING INC |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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