Correlation Between Safety Insurance and MYFAIR GOLD
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and MYFAIR GOLD 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 Safety Insurance and MYFAIR GOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and MYFAIR GOLD P, you can compare the effects of market volatilities on Safety Insurance and MYFAIR GOLD 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 Safety Insurance with a short position of MYFAIR GOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and MYFAIR GOLD.
Diversification Opportunities for Safety Insurance and MYFAIR GOLD
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Safety and MYFAIR is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and MYFAIR GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYFAIR GOLD P and Safety Insurance 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 Safety Insurance Group are associated (or correlated) with MYFAIR GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYFAIR GOLD P has no effect on the direction of Safety Insurance i.e., Safety Insurance and MYFAIR GOLD go up and down completely randomly.
Pair Corralation between Safety Insurance and MYFAIR GOLD
Assuming the 90 days horizon Safety Insurance Group is expected to generate 0.44 times more return on investment than MYFAIR GOLD. However, Safety Insurance Group is 2.25 times less risky than MYFAIR GOLD. It trades about 0.05 of its potential returns per unit of risk. MYFAIR GOLD P is currently generating about 0.01 per unit of risk. If you would invest 7,124 in Safety Insurance Group on September 1, 2024 and sell it today you would earn a total of 876.00 from holding Safety Insurance Group or generate 12.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Safety Insurance Group vs. MYFAIR GOLD P
Performance |
Timeline |
Safety Insurance |
MYFAIR GOLD P |
Safety Insurance and MYFAIR GOLD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Safety Insurance and MYFAIR GOLD
The main advantage of trading using opposite Safety Insurance and MYFAIR GOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, MYFAIR GOLD 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 MYFAIR GOLD will offset losses from the drop in MYFAIR GOLD's long position.Safety Insurance vs. The Progressive | Safety Insurance vs. Fairfax Financial Holdings | Safety Insurance vs. Insurance Australia Group |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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