Correlation Between Safety Insurance and Vonovia SE
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and Vonovia SE 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 Vonovia SE 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 Vonovia SE, you can compare the effects of market volatilities on Safety Insurance and Vonovia SE 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 Vonovia SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Vonovia SE.
Diversification Opportunities for Safety Insurance and Vonovia SE
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Safety and Vonovia is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Vonovia SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE 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 Vonovia SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vonovia SE has no effect on the direction of Safety Insurance i.e., Safety Insurance and Vonovia SE go up and down completely randomly.
Pair Corralation between Safety Insurance and Vonovia SE
Assuming the 90 days horizon Safety Insurance Group is expected to generate 1.32 times more return on investment than Vonovia SE. However, Safety Insurance is 1.32 times more volatile than Vonovia SE. It trades about 0.19 of its potential returns per unit of risk. Vonovia SE is currently generating about -0.21 per unit of risk. If you would invest 7,300 in Safety Insurance Group on August 24, 2024 and sell it today you would earn a total of 500.00 from holding Safety Insurance Group or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Safety Insurance Group vs. Vonovia SE
Performance |
| Timeline |
| Safety Insurance |
| Vonovia SE |
Safety Insurance and Vonovia SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Vonovia SE
The main advantage of trading using opposite Safety Insurance and Vonovia SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, Vonovia SE 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 Vonovia SE will offset losses from the drop in Vonovia SE's long position.| Safety Insurance vs. QBE Insurance Group | Safety Insurance vs. Insurance Australia Group | Safety Insurance vs. Superior Plus Corp | Safety Insurance vs. NMI Holdings |
| Vonovia SE vs. AEGEAN AIRLINES | Vonovia SE vs. LIFENET INSURANCE CO | Vonovia SE vs. Zurich Insurance Group | Vonovia SE vs. Safety Insurance Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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