Correlation Between Selective Insurance and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Automatic Data 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 Automatic Data 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 Automatic Data Processing, you can compare the effects of market volatilities on Selective Insurance and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Automatic Data.
Diversification Opportunities for Selective Insurance and Automatic Data
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Selective and Automatic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Selective Insurance i.e., Selective Insurance and Automatic Data go up and down completely randomly.
Pair Corralation between Selective Insurance and Automatic Data
Assuming the 90 days horizon Selective Insurance Group is expected to under-perform the Automatic Data. In addition to that, Selective Insurance is 1.45 times more volatile than Automatic Data Processing. It trades about -0.01 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.07 per unit of volatility. If you would invest 19,864 in Automatic Data Processing on November 6, 2024 and sell it today you would earn a total of 9,351 from holding Automatic Data Processing or generate 47.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. Automatic Data Processing
Performance |
| Timeline |
| Selective Insurance |
| Automatic Data Processing |
Selective Insurance and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Automatic Data
The main advantage of trading using opposite Selective Insurance and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Selective Insurance vs. H2O Retailing | Selective Insurance vs. AOYAMA TRADING | Selective Insurance vs. Odyssean Investment Trust | Selective Insurance vs. AGNC INVESTMENT |
| Automatic Data vs. Goosehead Insurance | Automatic Data vs. INSURANCE AUST GRP | Automatic Data vs. Insurance Australia Group | Automatic Data vs. Siamgas And Petrochemicals |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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