Correlation Between Safety Insurance and COMPUTERSHARE
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and COMPUTERSHARE 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 COMPUTERSHARE 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 COMPUTERSHARE, you can compare the effects of market volatilities on Safety Insurance and COMPUTERSHARE 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 COMPUTERSHARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and COMPUTERSHARE.
Diversification Opportunities for Safety Insurance and COMPUTERSHARE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Safety and COMPUTERSHARE is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and COMPUTERSHARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPUTERSHARE 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 COMPUTERSHARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPUTERSHARE has no effect on the direction of Safety Insurance i.e., Safety Insurance and COMPUTERSHARE go up and down completely randomly.
Pair Corralation between Safety Insurance and COMPUTERSHARE
Assuming the 90 days horizon Safety Insurance is expected to generate 1.99 times less return on investment than COMPUTERSHARE. In addition to that, Safety Insurance is 1.01 times more volatile than COMPUTERSHARE. It trades about 0.02 of its total potential returns per unit of risk. COMPUTERSHARE is currently generating about 0.05 per unit of volatility. If you would invest 1,423 in COMPUTERSHARE on August 31, 2024 and sell it today you would earn a total of 527.00 from holding COMPUTERSHARE or generate 37.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Safety Insurance Group vs. COMPUTERSHARE
Performance |
| Timeline |
| Safety Insurance |
| COMPUTERSHARE |
Safety Insurance and COMPUTERSHARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and COMPUTERSHARE
The main advantage of trading using opposite Safety Insurance and COMPUTERSHARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, COMPUTERSHARE 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 COMPUTERSHARE will offset losses from the drop in COMPUTERSHARE's long position.| Safety Insurance vs. Chuangs China Investments | Safety Insurance vs. UNIVERSAL MUSIC GROUP | Safety Insurance vs. Gladstone Investment | Safety Insurance vs. BURLINGTON STORES |
| COMPUTERSHARE vs. CapitaLand Investment Limited | COMPUTERSHARE vs. DIVERSIFIED ROYALTY | COMPUTERSHARE vs. SLR Investment Corp | COMPUTERSHARE vs. Reinsurance Group of |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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