Correlation Between Selective Insurance and Horace Mann
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Horace Mann 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 Selective Insurance and Horace Mann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selective Insurance Group and Horace Mann Educators, you can compare the effects of market volatilities on Selective Insurance and Horace Mann 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 Selective Insurance with a short position of Horace Mann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Horace Mann.
Diversification Opportunities for Selective Insurance and Horace Mann
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Selective and Horace is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Horace Mann Educators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horace Mann Educators and Selective 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 Selective Insurance Group are associated (or correlated) with Horace Mann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horace Mann Educators has no effect on the direction of Selective Insurance i.e., Selective Insurance and Horace Mann go up and down completely randomly.
Pair Corralation between Selective Insurance and Horace Mann
Given the investment horizon of 90 days Selective Insurance is expected to generate 5.6 times less return on investment than Horace Mann. But when comparing it to its historical volatility, Selective Insurance Group is 1.28 times less risky than Horace Mann. It trades about 0.04 of its potential returns per unit of risk. Horace Mann Educators is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,701 in Horace Mann Educators on August 24, 2024 and sell it today you would earn a total of 392.00 from holding Horace Mann Educators or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. Horace Mann Educators
Performance |
| Timeline |
| Selective Insurance |
| Horace Mann Educators |
Selective Insurance and Horace Mann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Horace Mann
The main advantage of trading using opposite Selective Insurance and Horace Mann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Horace Mann 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 Horace Mann will offset losses from the drop in Horace Mann's long position.| Selective Insurance vs. Kemper | Selective Insurance vs. Donegal Group B | Selective Insurance vs. Argo Group International | Selective Insurance vs. Global Indemnity PLC |
| Horace Mann vs. Kemper | Horace Mann vs. RLI Corp | Horace Mann vs. Global Indemnity PLC | Horace Mann vs. Argo Group International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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