Correlation Between Selective Insurance and MDJM
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and MDJM 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 MDJM 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 MDJM, you can compare the effects of market volatilities on Selective Insurance and MDJM 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 MDJM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and MDJM.
Diversification Opportunities for Selective Insurance and MDJM
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Selective and MDJM is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Selective Insurance i.e., Selective Insurance and MDJM go up and down completely randomly.
Pair Corralation between Selective Insurance and MDJM
Given the investment horizon of 90 days Selective Insurance Group is expected to under-perform the MDJM. But the stock apears to be less risky and, when comparing its historical volatility, Selective Insurance Group is 10.1 times less risky than MDJM. The stock trades about -0.19 of its potential returns per unit of risk. The MDJM is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16.00 in MDJM on October 28, 2024 and sell it today you would earn a total of 1.00 from holding MDJM or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. MDJM
Performance |
| Timeline |
| Selective Insurance |
| MDJM |
Selective Insurance and MDJM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and MDJM
The main advantage of trading using opposite Selective Insurance and MDJM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, MDJM 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 MDJM will offset losses from the drop in MDJM'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 |
| MDJM vs. Nasdaq Inc | MDJM vs. Definitive Healthcare Corp | MDJM vs. SmartStop Self Storage | MDJM vs. Cadence Design Systems |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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