Correlation Between Safety Insurance and Holmen AB
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and Holmen AB 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 Holmen AB 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 Holmen AB, you can compare the effects of market volatilities on Safety Insurance and Holmen AB 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 Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Holmen AB.
Diversification Opportunities for Safety Insurance and Holmen AB
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Safety and Holmen is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB 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 Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of Safety Insurance i.e., Safety Insurance and Holmen AB go up and down completely randomly.
Pair Corralation between Safety Insurance and Holmen AB
Assuming the 90 days horizon Safety Insurance is expected to generate 1.83 times less return on investment than Holmen AB. In addition to that, Safety Insurance is 1.43 times more volatile than Holmen AB. It trades about 0.04 of its total potential returns per unit of risk. Holmen AB is currently generating about 0.11 per unit of volatility. If you would invest 3,574 in Holmen AB on September 12, 2024 and sell it today you would earn a total of 86.00 from holding Holmen AB or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. Holmen AB
Performance |
| Timeline |
| Safety Insurance |
| Holmen AB |
Safety Insurance and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Holmen AB
The main advantage of trading using opposite Safety Insurance and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, Holmen AB 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 Holmen AB will offset losses from the drop in Holmen AB's long position.| Safety Insurance vs. QBE Insurance Group | Safety Insurance vs. Insurance Australia Group | Safety Insurance vs. Superior Plus Corp | Safety Insurance vs. SIVERS SEMICONDUCTORS AB |
| Holmen AB vs. SERI INDUSTRIAL EO | Holmen AB vs. VIRG NATL BANKSH | Holmen AB vs. Regions Financial | Holmen AB vs. Webster Financial |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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