Correlation Between Selectquote and Fanhua
Can any of the company-specific risk be diversified away by investing in both Selectquote and Fanhua 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 Selectquote and Fanhua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selectquote and Fanhua Inc, you can compare the effects of market volatilities on Selectquote and Fanhua 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 Selectquote with a short position of Fanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selectquote and Fanhua.
Diversification Opportunities for Selectquote and Fanhua
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Selectquote and Fanhua is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Selectquote and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and Selectquote 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 Selectquote are associated (or correlated) with Fanhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanhua Inc has no effect on the direction of Selectquote i.e., Selectquote and Fanhua go up and down completely randomly.
Pair Corralation between Selectquote and Fanhua
Given the investment horizon of 90 days Selectquote is expected to generate 1.36 times more return on investment than Fanhua. However, Selectquote is 1.36 times more volatile than Fanhua Inc. It trades about 0.31 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.49 per unit of risk. If you would invest 292.00 in Selectquote on October 12, 2024 and sell it today you would earn a total of 118.00 from holding Selectquote or generate 40.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selectquote vs. Fanhua Inc
Performance |
| Timeline |
| Selectquote |
| Fanhua Inc |
Selectquote and Fanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selectquote and Fanhua
The main advantage of trading using opposite Selectquote and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selectquote position performs unexpectedly, Fanhua 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 Fanhua will offset losses from the drop in Fanhua's long position.| Selectquote vs. GoHealth | Selectquote vs. CorVel Corp | Selectquote vs. Erie Indemnity | Selectquote vs. eHealth |
| Fanhua vs. National Vision Holdings | Fanhua vs. Skillful Craftsman Education | Fanhua vs. HUTCHMED DRC | Fanhua vs. Lindblad Expeditions 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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