Correlation Between Safety Insurance and MYFAIR GOLD

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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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Safety Insurance Group  vs.  MYFAIR GOLD P

 Performance 
       Timeline  
Safety Insurance 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Safety Insurance Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Safety Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
MYFAIR GOLD P 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MYFAIR GOLD P are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MYFAIR GOLD reported solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Safety Insurance Group and MYFAIR GOLD P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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