Correlation Between RELIANCE STEEL and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL 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 RELIANCE STEEL and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RELIANCE STEEL AL and Safety Insurance Group, you can compare the effects of market volatilities on RELIANCE STEEL 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 RELIANCE STEEL with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and Safety Insurance.
Diversification Opportunities for RELIANCE STEEL and Safety Insurance
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between RELIANCE and Safety is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and RELIANCE STEEL 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 RELIANCE STEEL AL 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 RELIANCE STEEL i.e., RELIANCE STEEL and Safety Insurance go up and down completely randomly.
Pair Corralation between RELIANCE STEEL and Safety Insurance
Assuming the 90 days trading horizon RELIANCE STEEL AL is expected to generate 0.83 times more return on investment than Safety Insurance. However, RELIANCE STEEL AL is 1.2 times less risky than Safety Insurance. It trades about -0.07 of its potential returns per unit of risk. Safety Insurance Group is currently generating about -0.09 per unit of risk. If you would invest 29,390 in RELIANCE STEEL AL on December 4, 2024 and sell it today you would lose (1,870) from holding RELIANCE STEEL AL or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RELIANCE STEEL AL vs. Safety Insurance Group
Performance |
| Timeline |
| RELIANCE STEEL AL |
| Safety Insurance |
RELIANCE STEEL and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RELIANCE STEEL and Safety Insurance
The main advantage of trading using opposite RELIANCE STEEL and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELIANCE STEEL 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.| RELIANCE STEEL vs. UNIQA INSURANCE GR | RELIANCE STEEL vs. Ebro Foods SA | RELIANCE STEEL vs. US Foods Holding | RELIANCE STEEL vs. GURU ORGANIC ENERGY |
| Safety Insurance vs. Coor Service Management | Safety Insurance vs. REGAL ASIAN INVESTMENTS | Safety Insurance vs. MTI INVESTMENT SE | Safety Insurance vs. Ares Management Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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