Correlation Between Safety Insurance and MTI WIRELESS
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and MTI WIRELESS 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 MTI WIRELESS 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 MTI WIRELESS EDGE, you can compare the effects of market volatilities on Safety Insurance and MTI WIRELESS 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 MTI WIRELESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and MTI WIRELESS.
Diversification Opportunities for Safety Insurance and MTI WIRELESS
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Safety and MTI is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and MTI WIRELESS EDGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI WIRELESS EDGE 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 MTI WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI WIRELESS EDGE has no effect on the direction of Safety Insurance i.e., Safety Insurance and MTI WIRELESS go up and down completely randomly.
Pair Corralation between Safety Insurance and MTI WIRELESS
Assuming the 90 days horizon Safety Insurance Group is expected to generate 0.67 times more return on investment than MTI WIRELESS. However, Safety Insurance Group is 1.5 times less risky than MTI WIRELESS. It trades about 0.04 of its potential returns per unit of risk. MTI WIRELESS EDGE is currently generating about -0.21 per unit of risk. If you would invest 8,009 in Safety Insurance Group on September 12, 2024 and sell it today you would earn a total of 91.00 from holding Safety Insurance Group or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. MTI WIRELESS EDGE
Performance |
| Timeline |
| Safety Insurance |
| MTI WIRELESS EDGE |
Safety Insurance and MTI WIRELESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and MTI WIRELESS
The main advantage of trading using opposite Safety Insurance and MTI WIRELESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, MTI WIRELESS 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 MTI WIRELESS will offset losses from the drop in MTI WIRELESS'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 |
| MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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