Correlation Between Safety Insurance and Air Transport
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and Air Transport 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 Air Transport 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 Air Transport Services, you can compare the effects of market volatilities on Safety Insurance and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Air Transport.
Diversification Opportunities for Safety Insurance and Air Transport
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Safety and Air is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Safety Insurance i.e., Safety Insurance and Air Transport go up and down completely randomly.
Pair Corralation between Safety Insurance and Air Transport
Assuming the 90 days horizon Safety Insurance is expected to generate 3.27 times less return on investment than Air Transport. But when comparing it to its historical volatility, Safety Insurance Group is 3.04 times less risky than Air Transport. It trades about 0.27 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,540 in Air Transport Services on August 29, 2024 and sell it today you would earn a total of 560.00 from holding Air Transport Services or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Safety Insurance Group vs. Air Transport Services
Performance |
| Timeline |
| Safety Insurance |
| Air Transport Services |
Safety Insurance and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Air Transport
The main advantage of trading using opposite Safety Insurance and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Safety Insurance vs. PICC Property and | Safety Insurance vs. QBE Insurance Group | Safety Insurance vs. Superior Plus Corp | Safety Insurance vs. SIVERS SEMICONDUCTORS AB |
| Air Transport vs. Aena SME SA | Air Transport vs. Superior Plus Corp | Air Transport vs. NMI Holdings | Air Transport vs. SIVERS SEMICONDUCTORS AB |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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