Correlation Between Safety Insurance and Teva Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and Teva Pharmaceutical 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 Teva Pharmaceutical 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 Teva Pharmaceutical Industries, you can compare the effects of market volatilities on Safety Insurance and Teva Pharmaceutical 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 Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Teva Pharmaceutical.
Diversification Opportunities for Safety Insurance and Teva Pharmaceutical
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Safety and Teva is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical 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 Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Safety Insurance i.e., Safety Insurance and Teva Pharmaceutical go up and down completely randomly.
Pair Corralation between Safety Insurance and Teva Pharmaceutical
Assuming the 90 days horizon Safety Insurance Group is expected to under-perform the Teva Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, Safety Insurance Group is 2.96 times less risky than Teva Pharmaceutical. The stock trades about -0.14 of its potential returns per unit of risk. The Teva Pharmaceutical Industries is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,545 in Teva Pharmaceutical Industries on October 30, 2024 and sell it today you would earn a total of 545.00 from holding Teva Pharmaceutical Industries or generate 35.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.37% |
| Values | Daily Returns |
Safety Insurance Group vs. Teva Pharmaceutical Industries
Performance |
| Timeline |
| Safety Insurance |
| Teva Pharmaceutical |
Safety Insurance and Teva Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Teva Pharmaceutical
The main advantage of trading using opposite Safety Insurance and Teva Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, Teva Pharmaceutical 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 Teva Pharmaceutical will offset losses from the drop in Teva Pharmaceutical's long position.| Safety Insurance vs. PICC Property and | Safety Insurance vs. Fairfax Financial Holdings | Safety Insurance vs. QBE Insurance Group | Safety Insurance vs. Insurance Australia Group |
| Teva Pharmaceutical vs. Inspire Medical Systems | Teva Pharmaceutical vs. Japan Medical Dynamic | Teva Pharmaceutical vs. LOANDEPOT INC A | Teva Pharmaceutical vs. PEPTONIC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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