Correlation Between Safety Insurance and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER, you can compare the effects of market volatilities on Safety Insurance and ALERION CLEANPOWER 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 ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and ALERION CLEANPOWER.
Diversification Opportunities for Safety Insurance and ALERION CLEANPOWER
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Safety and ALERION is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of Safety Insurance i.e., Safety Insurance and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between Safety Insurance and ALERION CLEANPOWER
Assuming the 90 days horizon Safety Insurance is expected to generate 1.41 times less return on investment than ALERION CLEANPOWER. But when comparing it to its historical volatility, Safety Insurance Group is 1.89 times less risky than ALERION CLEANPOWER. It trades about 0.34 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,500 in ALERION CLEANPOWER on September 3, 2024 and sell it today you would earn a total of 280.00 from holding ALERION CLEANPOWER or generate 18.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. ALERION CLEANPOWER
Performance |
| Timeline |
| Safety Insurance |
| ALERION CLEANPOWER |
Safety Insurance and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and ALERION CLEANPOWER
The main advantage of trading using opposite Safety Insurance and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.| Safety Insurance vs. Sims Metal Management | Safety Insurance vs. Flutter Entertainment PLC | Safety Insurance vs. TOWNSQUARE MEDIA INC | Safety Insurance vs. RCS MediaGroup SpA |
| ALERION CLEANPOWER vs. Apollo Medical Holdings | ALERION CLEANPOWER vs. American Airlines Group | ALERION CLEANPOWER vs. IMAGIN MEDICAL INC | ALERION CLEANPOWER vs. AVITA Medical |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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