Correlation Between Safety Insurance and SMA SOLAR
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and SMA SOLAR 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 SMA SOLAR 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 SMA SOLAR T, you can compare the effects of market volatilities on Safety Insurance and SMA SOLAR 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 SMA SOLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and SMA SOLAR.
Diversification Opportunities for Safety Insurance and SMA SOLAR
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Safety and SMA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and SMA SOLAR T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA SOLAR T 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 SMA SOLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA SOLAR T has no effect on the direction of Safety Insurance i.e., Safety Insurance and SMA SOLAR go up and down completely randomly.
Pair Corralation between Safety Insurance and SMA SOLAR
Assuming the 90 days horizon Safety Insurance Group is expected to under-perform the SMA SOLAR. But the stock apears to be less risky and, when comparing its historical volatility, Safety Insurance Group is 8.39 times less risky than SMA SOLAR. The stock trades about -0.11 of its potential returns per unit of risk. The SMA SOLAR T is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 120.00 in SMA SOLAR T on October 24, 2024 and sell it today you would earn a total of 25.00 from holding SMA SOLAR T or generate 20.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Safety Insurance Group vs. SMA SOLAR T
Performance |
| Timeline |
| Safety Insurance |
| SMA SOLAR T |
Safety Insurance and SMA SOLAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and SMA SOLAR
The main advantage of trading using opposite Safety Insurance and SMA SOLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, SMA SOLAR 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 SMA SOLAR will offset losses from the drop in SMA SOLAR's long position.| Safety Insurance vs. SIDETRADE EO 1 | Safety Insurance vs. SALESFORCE INC CDR | Safety Insurance vs. Addtech AB | Safety Insurance vs. CHINA TONTINE WINES |
| SMA SOLAR vs. Safety Insurance Group | SMA SOLAR vs. GigaMedia | SMA SOLAR vs. REVO INSURANCE SPA | SMA SOLAR vs. GAMING FAC SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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