Correlation Between Safety Insurance and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on Safety Insurance and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and SLR Investment.
Diversification Opportunities for Safety Insurance and SLR Investment
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Safety and SLR is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Safety Insurance i.e., Safety Insurance and SLR Investment go up and down completely randomly.
Pair Corralation between Safety Insurance and SLR Investment
Assuming the 90 days horizon Safety Insurance is expected to generate 1.32 times less return on investment than SLR Investment. In addition to that, Safety Insurance is 1.46 times more volatile than SLR Investment Corp. It trades about 0.04 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.08 per unit of volatility. If you would invest 1,267 in SLR Investment Corp on September 3, 2024 and sell it today you would earn a total of 294.00 from holding SLR Investment Corp or generate 23.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. SLR Investment Corp
Performance |
| Timeline |
| Safety Insurance |
| SLR Investment Corp |
Safety Insurance and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and SLR Investment
The main advantage of trading using opposite Safety Insurance and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Safety Insurance vs. Sims Metal Management | Safety Insurance vs. Flutter Entertainment PLC | Safety Insurance vs. TOWNSQUARE MEDIA INC | Safety Insurance vs. RCS MediaGroup SpA |
| SLR Investment vs. Blackstone Group | SLR Investment vs. BlackRock | SLR Investment vs. The Bank of | SLR Investment vs. Ameriprise Financial |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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