Correlation Between Selective Insurance and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Reinsurance Group 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 Reinsurance Group 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 Reinsurance Group of, you can compare the effects of market volatilities on Selective Insurance and Reinsurance Group 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 Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Reinsurance Group.
Diversification Opportunities for Selective Insurance and Reinsurance Group
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Selective and Reinsurance is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Selective Insurance i.e., Selective Insurance and Reinsurance Group go up and down completely randomly.
Pair Corralation between Selective Insurance and Reinsurance Group
Given the investment horizon of 90 days Selective Insurance Group is expected to generate 0.96 times more return on investment than Reinsurance Group. However, Selective Insurance Group is 1.04 times less risky than Reinsurance Group. It trades about 0.27 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.17 per unit of risk. If you would invest 9,148 in Selective Insurance Group on August 31, 2024 and sell it today you would earn a total of 1,052 from holding Selective Insurance Group or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. Reinsurance Group of
Performance |
| Timeline |
| Selective Insurance |
| Reinsurance Group |
Selective Insurance and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Reinsurance Group
The main advantage of trading using opposite Selective Insurance and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| Selective Insurance vs. Progressive Corp | Selective Insurance vs. Chubb | Selective Insurance vs. The Allstate | Selective Insurance vs. Kemper |
| Reinsurance Group vs. Maiden Holdings | Reinsurance Group vs. Greenlight Capital Re | Reinsurance Group vs. RenaissanceRe Holdings | Reinsurance Group vs. Renaissancere Holdings |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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