Correlation Between Safety Insurance and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and Coffee Holding 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 Coffee Holding 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 Coffee Holding Co, you can compare the effects of market volatilities on Safety Insurance and Coffee Holding 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 Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Coffee Holding.
Diversification Opportunities for Safety Insurance and Coffee Holding
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Safety and Coffee is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding 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 Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of Safety Insurance i.e., Safety Insurance and Coffee Holding go up and down completely randomly.
Pair Corralation between Safety Insurance and Coffee Holding
Assuming the 90 days horizon Safety Insurance Group is expected to generate 0.29 times more return on investment than Coffee Holding. However, Safety Insurance Group is 3.43 times less risky than Coffee Holding. It trades about -0.05 of its potential returns per unit of risk. Coffee Holding Co is currently generating about -0.2 per unit of risk. If you would invest 7,850 in Safety Insurance Group on October 14, 2024 and sell it today you would lose (100.00) from holding Safety Insurance Group or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. Coffee Holding Co
Performance |
| Timeline |
| Safety Insurance |
| Coffee Holding |
Safety Insurance and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Coffee Holding
The main advantage of trading using opposite Safety Insurance and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding's long position.| Safety Insurance vs. China Eastern Airlines | Safety Insurance vs. American Airlines Group | Safety Insurance vs. PLAYTIKA HOLDING DL 01 | Safety Insurance vs. PLAYWAY SA ZY 10 |
| Coffee Holding vs. Gaztransport Technigaz SA | Coffee Holding vs. Iridium Communications | Coffee Holding vs. MOBILE FACTORY INC | Coffee Holding vs. Zoom Video Communications |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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