Correlation Between Selective Insurance and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Universal Insurance 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 Universal Insurance 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 Universal Insurance Holdings, you can compare the effects of market volatilities on Selective Insurance and Universal Insurance 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Universal Insurance.
Diversification Opportunities for Selective Insurance and Universal Insurance
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Selective and Universal is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Selective Insurance i.e., Selective Insurance and Universal Insurance go up and down completely randomly.
Pair Corralation between Selective Insurance and Universal Insurance
Assuming the 90 days horizon Selective Insurance is expected to generate 3.3 times less return on investment than Universal Insurance. But when comparing it to its historical volatility, Selective Insurance Group is 2.99 times less risky than Universal Insurance. It trades about 0.04 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,002 in Universal Insurance Holdings on August 25, 2024 and sell it today you would earn a total of 286.00 from holding Universal Insurance Holdings or generate 14.29% 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. Universal Insurance Holdings
Performance |
| Timeline |
| Selective Insurance |
| Universal Insurance |
Selective Insurance and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Universal Insurance
The main advantage of trading using opposite Selective Insurance and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| Selective Insurance vs. Aspen Insurance Holdings | Selective Insurance vs. Aspen Insurance Holdings | Selective Insurance vs. AmTrust Financial Services | Selective Insurance vs. Argo Group International |
| Universal Insurance vs. HCI Group | Universal Insurance vs. Kingstone Companies | Universal Insurance vs. Horace Mann Educators | Universal Insurance vs. Heritage Insurance Hldgs |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |